International Law is the Key for Co-ordinating a Mutually Acceptable Balance of Interests in the Energy Sector

Oil, gas and hydrocarbons will continue to play the crucial role in the development of the global economy and in ensuring the well-being of nearly all countries for a long time to come, for many decades

Q:We believe that oil is an instrument of political manipulation. The largest ever energy crisis of 1973 was a result of political manipulation following the Yom Kippur War. Do you agree that oil is an instrument of political manipulation? Can you provide more striking examples of this or arguments to the contrary?

All natural resources on which economic development, influence and might depend are instruments of political struggle. It is logical that they are used for political purposes, including geopolitical ones. We saw this in the 1980s, when the United States put colossal pressure on Saudi Arabia and other Gulf countries, which were the main oil producers, bringing about a collapse in oil prices to $10 or even lower per barrel in the hope of reducing the Soviet Union’s foreign exchange earnings and hence its capacity to continue to develop and ensure its security. At that time, we continued to compete with the United States and the West as a whole. They achieved their goal. The Soviet Union’s revenues plummeted, which was one of the causes, though not the main or only one, that led to its dissolution. They put pressure on the oil market, used speculation for the fall, drew the Soviet Union into an arms race, and promoted “democratic reforms” when our country was not prepared for them. Taken together, this contributed to the fall of a great power.

Since then, the Americans have been using oil and oil prices as a weapon. A relevant example is Iran, which had its oil exports banned and the channels of oil deliveries contrary to that illegal ban were blocked. Today, oil sanctions against Iran have been lifted. The latest example is Venezuela, which was the third largest oil supplier to the United States in 2019. In 2022, the Americans adopted an oil embargo against it, allegedly in the struggle against the “regime” of Nicolas Maduro, as they put it. But later they faced the consequences of the OPEC and OPEC Plus efforts to stabilise the oil market based on the main economic factors and a balance of interests of producers, importers and transit countries. Today, the Americans are playing new political games against Venezuela, offering it an agreement to resume oil exports to the United States in exchange for political concessions. However, it is a fact that Washington is suffering the consequences of its own actions considering that a vast number of American oil refineries were equipped to process Venezuelan oil. It is a combination of purely economic factors and a desire to take advantage of economic ties, in this instance, use oil as a weapon.

As for Russia, what is the oil price cap imposed on Russian oil by the Americans, which the West was pressured to adopt as well? It is flagrant interference in the workings and principles of the free market, which the Americans have been promoting for decades. They described the dollar not as an American currency but as a global element of interconnectivity between the global economy and finances. The structure collapsed when they decided to use these instruments to inflict what they described as “geopolitical defeat” on Russia. It is obvious that nobody is happy about the use of these underhanded methods, although few people, especially in the West, dare to put their uneasiness into words.

The pinnacle of using hydrocarbons as a weapon was the explosion of the Nord Stream pipelines, which directly targeted Germany. American analysts have admitted it, and many in Germany are openly saying this. It is evidence of the current German government’s impotence and inability not just to think independently but to even protect its vital interests on which the prosperity and well-being of German citizens depend.

As a result of that subversive terrorist attack,businesses, faced with rising gas prices, are leaving Germany and other European countries, and relocating, for the most part, to the United States. They have started to talk about the de-industrialisation of Europe. A year ago, FrenchMinister for the Economy and Finances Bruno Le Maire said in a public statement that businesses paid four times more for energy in Europe than in the United States. I believe the balance is approximately the same now. It is a fact that the United States has created much more favourable conditions for businesses, including by approving credit subsidies under the Inflation Reduction Act. Business is moving to the United States. At the same time, immediately after blowing up the gas pipelines, Washington said that in the absence of Russian gas Europe needed to buy American LNG, even though it cost more and there was a lack of the necessary infrastructure, which was still to be built.

Four years ago, when Angela Merkel was chancellor and life was easier, the Americans attempted to convince Germany that it had no need for Nord Stream or Russian gas in general, that it could buy American LNG instead. Angela Merkel argued that it would be more complicated and much more expensive. The Americans agreed that it would cost more and suggested covering the difference with higher taxes. After all, they said, you can tell your people that it is a good cause in the interests of peace and democracy throughout the world. There are more examples of this kind.

Q: After the assassination of King Faisal in 1975, Saudi Arabia became a committed ally of the United States. The decision to quote oil contracts in US dollars and the creation of petrodollars would have been impossiblewithout Saudi Arabia. But it has recently embarked on a path that suggests a divergence from this alliance with the United States. Is this true, and if so, what are the underlying reasons for this? And how predictable is this trajectory? Is there a risk that we will lose Saudi Arabia again? Could it follow the US lead again?

I wouldn’t say that the Saudis have steered away from the United States. They simply decided to pursue their own national policy without interference from any direction, from the left or right, above or below, primarily from the United States. This trend has become stable in Saudi Arabia, especially since Crown Prince Salman bin Abdulaziz Al Saud was appointed Prime Minister and launched Vision 2030. There is still a great deal to be done by this deadline, which is not far away. A lot has already been accomplished. Saudi Arabia, acting in the interests of the kingdom and its people, wants oil prices to be stable and to ensure good profits for oil producing countries while also being attractive for buyers.

This is exactly what we are doing within the framework of OPEC Plus, with support from all other group members. Saudi Arabia is steering this line very clearly. We will not tolerate any attempts to interfere in these processes.

I read the other day that Ukraine has been trying to convince Washington to halve the price cap for Russian oil, to $30 per barrel. This is outrageous, not to mention the fact that the idea of a price cap contradicts market rules and reflects a desire to dictate conditions. However, it is notable that the United States is unlikely to yield to Ukraine’s demand, if only because this would harm the Americans themselves and provoke undesirable reactions in the oil market. I hope the United States has at least some national pride left and will not dance to Zelensky’s tune.

Q: You mentioned Venezuela, where our companies, notably Rosneft, are very active. Chevron is now being pressured by the Unted States. Can “Bolivar carry double,” or will Venezuela have to choose?

According to many experts, Venezuela has the largest oil resources in the world. We are against monopolism in principle. There is enough space for everyone [in this market], provided everyone plays fair and the process of assigning investment opportunities in Venezuela’s oil sector is honest.

Our Venezuelan friends are aware of the situation. Of course, they listen to what the United States says. Nobody will deny the United States the opportunity to engage in serious discussions if that is what they truly want. Any normal country will be prepared to listen. They [Venezuelans] are talking [with the United States]; they want sanctions to be lifted. But the Americans only press for concessions in the sphere of human rights and advance the usual “democratic” demands without explaining their meaning. As Washington sees it, loyalty to the United States is the criteria of democracy. But the Venezuelans remember that the Americans auctioned the US branch of Venezuela’s national oil company PDVSA during the period of embargo. They just did it. In fact, they expropriated it.

Everyone is well aware of Washington’s methods. There can be no expectation of mutually beneficial solutions.When talking with Washington, you need to firmly press for your own advantage and never expect it to fulfil its sweet promises.

Q: We are becoming Iran’s rival in the oil market. Will it be friendly competition, or won’t our interests clash at all?

I see no issue with Iran regaining its legal right to develop by selling oil and investing the oil revenues.

The OPEC Plus, where both Iran and Russia are members, has a clear formula for reaching agreements and finding compromises. It has been used for years, and nobody hasbeen disadvantaged or dissatisfied, especially since the hydrocarbon market is bound to grow, as I see it. China’s growth has slowed down a little, but figures show that it has been growing two or three times faster than many other countries, in particular Western ones. India is growing even more rapidly. Therefore, there will be no shortage of consumers. Look at Africa, where we doubled the export of petroleum products over the past year or year and a half.

There is no reason for fear. Normal countries whose actions are based on international law will always coordinate a mutually acceptable balance of interests.

Q: The invention of the ICE and its active use have ushered in an era of wars on the planet, which in one way or another are fuelled by rivalry for the possession of oil-rich territories. Do you agree with this idea? Some experts strongly oppose it, while others share it. What is your view?

It depends on the point of view you choose (pardon the tautology). The most recent notable case is the special military operation, the fighting in Ukraine. From the materiel point of view, they have 100 percent of their needs satisfied by the United States and their NATO allies. In terms of personnel, they have a full complement of Ukrainians, mercenaries, and instructors. The stated objective of this war against Russia is ostensibly to prevent us from impinging on Ukraine’s sovereignty and restore its territorial integrity, among other things.

We cannot ignore the fact that Russia is one of the oil and gas producers and exporters of oil and gas. Our country was the principal gas supplier for Europe. The Soviet-built gas pipelines provided Europe, especially Germany, with decades of ease and prosperity. There were no beggars or poverty there on the scale observed in the United States. But even before the Nord Stream pipelines were blown up, the West was pressuring Europe to stop using Russian gas. It was directly imposing its own energy. Their stated goal is to defeat Russia on the battlefield, weaken it, and strip it of its status as a global player. Many NGOs and even high-ranking politicians issue official statements to the effect that Russia must be “decolonised.” Puppet organisations are created abroad, seeking “freedom” for certain Russian republics. It is evident that this is somehow connected to their plan to undermine the country that competes with the United States in energy markets.

Another example is the current war in Syria. During the Arab Spring, an attempt was made to crush the Syrian statehood in the same way as NATO had done in Libya and a number of other countries. We intervened and saved Syria, which came as a complete surprise for the Americans and those who were planning a regime change in Damascus. Bashar al-Assad’s “regime” (as they say) is still a fully-fledged member of the United Nations and enjoys support from the majority of Syrians. But this does not suit the United States. Unlike us, the US illegally sent its occupying force to northeastern Syria, the country’s main oil-bearing and agricultural region. In Syria, the oil and grain production is concentrated in the northeast, and the Americans have occupied this area. They are producing oil there and are stealing it. Every day, convoys are sent to US-designated addresses via Iraq. This is colonialism pure and simple. There is nothing more to say. Simultaneously, the Americans “maintain” camps in the same USoccupied northeastern areas of Syria. They are formally referred to as “refugee camps.” However, this is where they train insurgents, including members of terrorist organisations banned by the UN Security Council, such as Hayat Tahrir al-Sham and its affiliates. These militants are involved in sabotage attacks instigated by the US in various parts of the world, including against us in Ukraine. As you can see, oil is inseparably linked to geopolitics here.

Q: You said that the collapse of the Soviet Union was provoked, in part, by plummeting oil prices. When the Soviet Union fell apart, one of the first economic laws was the law on Natural Resources and the transfer of oil production to private companies, including foreign ones, under production sharing agreements and the like. There are two opposing views on that. Some think that it was vital at the time to save the economy…

Don’t ask me. This is not an issue for the Foreign Ministry to comment on. This is not our competence. It is beyond our competence. Besides, I knew many of those people very well…

Q: We all know them very well.

A simple question then. What is the first word that pops into your head when I say “oil”?

I have never thought about it.

Q: What if I ask you anyway? Oil is…

In terms of associations, I have just remembered that there is a brand of vodka called Oil; it’s a small black barrel. That’s one of the associations.

President Vladimir Putin has talked about this many times, commenting on the green transition initiatives. Their accelerated implementation led to food and energy crises because investment in hydrocarbons was slashed in the hope that the sun, the wind and water could provide sufficient energy. Those who are advocating the green agenda in Europe, including the Greens and similar parties in Germany, have placed their political ambitions above logic and economic interests. That’s why oil, and not oil alone, is being mentioned more often now. The plans for an immediate green transition have failed because the wind was not strong enough, the sun was not hot enough, and the tides were weak. Coal is being widely used in Europe again, on a larger scale than in Africa.

I attended a recent BRICS summit, where African delegates complained on the sidelines that the Americans continued to urge them to abandon coal and to invest in the green economy and green transition instead. At the same time, America is using much more coal than before and much more than other countries.

In short, oil, gas and hydrocarbons in general will continue to play the key role in the development of the global economy and in ensuring the well-being of nearly all countries for a long time to come, for many decades.

Q: Our oil supply routes have been moved towards the east, towards China and India. It is obvious that our colleagues and our current partners will look for favourable terms. Could we end up selling at a loss?

Not at all. I don’t envision this problem. As I said, China and India are growing fast. They can buy what many OPEC Plus countries offer. That organisation is regulating the market and prices honesty and fairly, respecting the consumers’ interests as well. OPEC Plus will not set prices that are unacceptable for buyers. This is what an honest balance of interests is. I don’t think we will become dependent on the countries that buy our oil and gas and are already doing so in increasing amounts. But we must be wary of those who blow up the infrastructure that ensured the prosperity of European countries. They were warned about “bad molecules” and told that they needed gas with “democratic molecules.” But justice will eventually prevail.

The original interview was first published on the official website of the Ministry of Foreign Affairs of the Russian Federation. Now, this interview is taken from the 6th issue of Urja Khabar, a bi-annual magazine. Which was Published on 15 June, 2024.
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