I am the moderator Nobuo Tanaka, former executive director of the iea, International

system of inter-industry relations, and increase production and revenues, hence the growth rates of the 

economy at large. Judging by the investment projects of our company, we know that additional growth of 

production in economy during the lifetime of the projects sometimes exceeds the initial costs by tens of 

times.          

We believe that in the nearest decade maximum potential is related to efficient use of our unique resource 

base of conventional oil, including areas of West Siberia with well developed infrastructure. Only 

Rosneft’s proved reserves amount to 29.8 billion barrels, which is sufficient for us to develop for another 

20 years even without expanding this base. 

In Russian oil industry, which has been operating for many decades, there are a lot of Brownfield assets. 

Certain stimuli for oil production increase were introduced, and in the last years production went up in 

these fields. Yet, with due tax stimulation, oil recovery ratios currently slightly exceeding 20% may well 

be increased to over 40-50%, which the best global projects have been showing in the last years. 

Such development will be accompanied by the most efficient use of the existing infrastructure and in the 

mid-term will maintain the environment of mutually beneficial cooperation of state and business – 

development of the most efficient resources and, hence, sufficient budget payments. 

Of course, it all speaks of the increasing role of efficient regulation of our industry. 

When planning the rate of changes in the Russian oil industry, one should account for the fact that under 

the severely complicated operational conditions such countries as Saudi Arabia, Iran, and Mexico already 

have taken actions for improvement of investment attractiveness of the industry and its projects. This is 

not to mention the USA, where without significant governmental support the shale oil industry would not 

even come to life considering the high prices at the period of its establishing. 

Let me make some final comments on behalf of the Company. Today, Rosneft is the largest publicly 

traded oil company in the world, taking the lead on the global level by a number of economic and 

resource indicators. 

We are aimed at development of the new projects. Our role is to combine unique geology of Russia with 

capital and the leading expertise of the partners. 

In September 2014, in the Kara Sea, Rosneft and Exxon's JV drilled the northernmost oil well in the 

world – Universitetskaya-1 – and discovered the Pobeda field. This is the largest field discovered in 2014 

in the world. The field reserves amount to 130 Mt of oil and 396 bcm of non-associated gas. As a result, 

we successfully created a new strategic area for shelf development. 

Pobeda is the northernmost project in the global oil and gas industry, unique both from the viewpoint of 

technologies and interaction with partners. Nevertheless, it is only the beginning. Successful discovery of 

the new field by drilling of the very first well confirmed justification of estimations of our geologists and 

our partners’ specialists – in essence, we speak about a gem of the global oil and gas industry. 

This discovery allowed confirming continuation of the largest West-Siberian petroleum-bearing province 

to the Kara Sea shelf. The experts say the scope of resources here is larger than in the Gulf of Mexico, the 

Brazilian shelf, the Arctic shelf of Alaska and Canada, and will be comparable to the whole of the 

existing resource base of Saudi Arabia. More than 30 structures are found on three East-

Prinovozemelskiy blocks of the Kara Sea only. DeGolyer & MacNaughton estimates the resource base of 

these blocks at 87 billion barrels or ca. 12 billion toe. 

We are looking at the years of intensive work, billions of investments, application of the most advanced 

and innovative technologies, but the biggest thing is already in place – there are no doubts that this is the 

richest region full of high quality oil! Of course, the projects of this scale are advisable to develop in 

cooperation, and we are fully prepared for that. 

Upon the whole, I would like to note that we are ready to open our resource base; we attract foreign 

investors both to share risks and to strengthen and develop technological competencies of the industry.  

In addition, I would like to mention the transactions for investors entering the Vankor Project. In the end 

of May 2016, we closed the deal with ONGC for purchase of 15% in the Project. This is a marquee 

transaction for both companies and marks transit to the new level of cooperation in Russian-Indian 

---

relations in the energy sector. ONGC will receive a significant share and corresponding rights in one of 

the largest projects of Rosneft over the past decade. 

We relentlessly improve efficiency of our work in all areas and try to turn the Company into one of the 

leading transnational players, responsible, open and determining the face of the industry in the nearest 

decades. An important factor of such success will be the efficient dialogue with our dear colleagues and 

partners present here today. 

Thank you very much for your attention. 

Nobuo Tanaka: Thank you very much, Mr. Sechin. You’ve covered so many important issues in the oil 

market about technologies and shale oil or Saudi Arabia’s service sector, restructuring, transportation, 

demand, side issues, collaboration. We will come up from what you have mentioned to my question to 

the other panelist, and so, he is here. Let me start with Bob Dudley, CEO of BP. Bob, BP has invested in 

Russia for some period of time. You yourself were in Russia. What are other strengths of the Russian oil 

and gas sector? Can it remain robust in the current turbulence of world oil market, and also, in this kind 

of low price, oil situation? There are lots of discussions that M&A could happen in the oil sector. Do you 

have any view on that? Can you respond in 5 minutes, please? 

Robert Dudley: I could probably do it in 1 minute, because my friend Mr. Sechin has described 

everything in lots of detail. I think, there won’t be 5 minutes. I think, Mr. Tanaka, there are some unique 

strengths of Russian oil industry, that Mr. Sechin has went through. It is incredibly large resource base 

which was outlined earlier, it is a very resilient energy industry in Russia. Oil production in Russia has 

increased now for seventh year in a row, growing by 1.2% last year. It is the largest oil exporter in the 

world. And it remains to be the largest gas exporter in the world. So it is a resource base that is very 

competitively priced. It’s open to foreign investors. It has a set of very strong experienced set of 

operators and professionals, such as Rosneft and other companies that are here today. It has a very 

sensible national policy of currencies flowing. It has moves with changes in last two or three years. I 

think most people forget that with the floating of the ruble that the cost structure of the industries moves 

with rubles and the revenue stream is still in dollars. So it’s a very healthy industry. With the restrictions, 

it has to work within the sanctions. It also has very vibrant local oil service sector. So this is unique set of 

combinations. It has very well developed infrastructure in core oil areas to move its products to market 

quickly with lots of potential. As I’ve said earlier, the operating cost per barrel is $2.10 is about as good 

as anywhere in the world. So I think all of those things go well for industry that is moving through yet 

another commodity cycle. We’ve been through this before. Each time we think it’s gonna  last, you 

roughly depending on whose numbers you use. $400 bln of investment to a firms and I’ve just said the 

IHS CERA outline more than a $1 trl of operating cost and CAPEX being deferred, now it can be 

identified of which about half is probably cost reductions, but we have half of its real. Now we know 

from history that every time world stops investing in energy, we were heading towards a world of 2 bln 

more people in 2035, we may end up with a different problem going forward. So that answers your 

question about Russian sector, but I obviously optimistic, it is based I think on realism. Regarding 

industry consolidation, you know, now we have into 2.5-3 years since two major changes in the price 

cycle. I don’t think, you’ll see big industry consolidation. It’s happened. There’s been some sides. I think 

what’s very advantageous is people are short of CAPEX around the world to make investments in 

projects that are under way. So what I see, more happening is people bolting on project areas that make 

very much sense and I see the focus on companies happening all over the world. And so others can 

always be outliers and there is some consolidation. That’s what I see as the major strategic trend right 

now. That’s less than 5 minutes, I give you a couple of minutes back. 

---