The Chicken that Lays Us Golden Eggs
Prime Minister Vladimir Putin met with participants of the 7th meeting of the Valdai International Discussion Club in Sochi.
Ninety political scientists, experts and historians from Russia and sixteen other countries took part in the Club meeting themed "Russia: History and Future Development".
John Peet of The Economist discussed the stagnation of Russia in terms of economic, scientific, social, and cultural development. Peet commented: "There is almost no real modernisation, restructuring or diversification. Oil and gas remain basic sources of income, there is nothing to curb corruption, and innovation is impeded. We conclude that this trend may persist for ten to fifteen years.”
Putin responded to Peet’s comments by offering a traditional vodka toast to welcome him to Sochi.
Energy was prominent throughout the discussions, as Putin refers to the oil and gas sector as: “the chicken that lays us golden eggs.”
“ It is a great part of the Russian economy. We admit everyone there. Many global companies are working in Russia. I am not sure that all the other countries of the world are as liberal in admitting foreign investors to such pivotal sectors. However, we are doing this, and we will do it later because we think that it promotes the interests of the Russian Federation.”
Following the news that Russian gas producer Gazprom lowered its revenue forecast for this year and that speculation that Germany is trying to obtain long-term contracts, lower prices, and new supply chains, Putin was asked if he was afraid that new suppliers might undermine the Russian state’s income base if Russia is no longer able to sell natural gas at previous prices.
His response was to acknowledge the claims certain experts make about some of Russia’s oil and gas companies, including Gazprom, due to an inflexible attitude toward price formulation.
Putin then poses the question:
“What's more profitable for a company - to be more flexible and make concessions to retain its full market share or be tougher, don't give in and take a loss in market share? The people working at Gazprom aren't Gazprom's enemies. They have a policy to strictly observe the terms of the existing long-term contracts because they think it's best for them. I will keep my personal feelings to myself. It is their policy; they know what they're doing and are take full responsibility for it. So they should given the opportunity to walk their own way.”
Putin then states the gas market is generally in revival and acknowledges the US shale gas development plans are a sensitive issue for Putin. He claims it will certainly increase competition for the Russian product on international markets:
“Qatar is a rival gas supplier, and Russia had to deal with competition in Europe last year. They had to switch to Europe because their American partners restricted their traditional market. What does this mean? It means that Russian producers must be more efficient, that's all. We do not see a catastrophe here. Their revenue may decrease, but the loss could be compensated for in a different market. And with global energy consumption steadily growing, I do not see any problem at all.
Mr Rahr from Germany, who has just asked some questions, must know that the German government has decided against closing nuclear power plants. Why? Because there is no alternative, that's why, because nuclear power generation is the only available alternative to oil and gas today. These projects exist. They are viable alternatives. All other ideas are just for fun now.
What you said about Gazprom's losses due to the economic downturn, and its hard line position in talks with its partners - well, we know all that. But we do not interfere with the daily management at Gazprom. Let us not forget that while the government controls 51% of Gazprom, it does not fully own it. Foreign shareholders have large stakes there too, and Gazprom management has the right to make its own decisions.”
Source: RiaNovosti