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

And we have, despite all the sanctions, continued to invest. But, you know, it's a question for me of long-

term vision. And I am sure and I’m sure all my peers will agree: in energy business we invest in a 

country, invest in projects for many years, and we face the difficulty, we face volatility, but we have to 

accept that. Whatever the storm, to keep straight sometimes, I would say. Our project in Yamal is there 

for 25-30 years. Things will happen during 30 years. I can tell you: price will go high, price will go 

down, sanctions will go, then will lift. And we'll face the events. That's one of the capacities of the 

business model of the major companies.  

Nobuo Tanaka: Thank you, Patrick. Let's move to Mister Del Pino. Eulogio, you are the Minister of 

Petrolium and Mining in Venesuela, and at the same time the President of PDVSA. We know that OPEC 

has new Secretary-General elected and also Saudi Arabia has a new oil Minister. Do you think that a 

policy of OPEC is moving more cooperation or more consolidation, or the other way around? And also 

do you maintain that the policy of testing the resiviance of shale production in the United States is a 

process of maintaining solidality of OPEC?  

Eulogio Del Pino: Thank you, Mr. Tanaka. Thank you, Igor for inviting me for a second year in a row. 

We together with Rosneft share several joint ventures in Venesuela, 5 joint ventures actually, and it is 

actually a huge and many gas field, so you are an excellent example to diversify opportunities and 

investment, because at the same time you are investing in huge resources you have in Russia, and have 

investings in huge resources of oil we have in Venesuela.  

Regarding your question. I'm going to take one of these slides that Igor shown, and to compare to last 

year, last year at this time we were with the price in the order of 60-62 euros, we were really 

disappointed, and then after there was a range of 48, and we were very happy, you know. That was a 

huge question, big discussion that we had in OPEC. How it happened that one year after now we feel 

more comfortable when the price is $12 less, and, probably, the answer is that now we have gone through 

very difficult times. And we have gone through longer cycle and with low price we had in the last 45 

years, and we learnt a lot. We learnt that we have a new channel of production coming to the market, 

which is non-efficient, which has to solve very important environmental issues. Most of the major 

companies are not investing in that kind of production because of the risks for environment, and we 

consider that we were able to propose together with the Minister of Russia, the Minister Naimi, the 

Minister of Qatar and myself, we propose, let me remember, in January we did that proposal, we finally 

proposed publically in February 2015 the price was in the order of $25. And there were comments in the 

news, that are fundamentals. I really believe that part of the answer are fundamental. But another risk that 

another major producers in the worlds, especially Russia and Saudi Arabia together we were able to sit 

together in February to propose some action to recover the price. And from that point to today we were 

able to lower the price of the oil in the middle of the winter, which is not easy.  

Unfortunately, we were not able when we for the very first time we were able to meet 18 different 

countries, more than 50 mln barrels a day were producing for those 18 companies, in Doha in April 17th. 

Unfortunately we know some issues that were arise there I guess were solved in the last meeting. I guess 

now we have two positions I heard about them proposed from our friends from France aloud a ceiling of 

price in the coal, that's very funny because them has been always blame to try to have this ceiling price or 

whatever. We were proposing to you ideas, you know, all you in OPEC we were this closing out the 

possibility to have a ceiling volume but he shouldn’t go to the quota system and that's discussion, you 

know. We preferred to monitor the market during this summer looks very optimistic on the price our 

view, has I am mention in different times, and we were very worried, I'm worried about how it's gonna be 

the behavior in the winter, because if at this time of the year we are $12 or $14 below the price last year 

what is gonna happen in the winter if we are not able to control the inventories. We have, and this is very 

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well known, we have more than three hundred million barrels above the average in the last five years of 

the inventories that are gonna be taken in this summer to compensate the difference between the offer and 

the demand, so we are thinking on the new ideas, some new ideas could be to ruin the bit of between 

ceiling volume or quota system that could be to load to a supply a range of production. Well, even OPEC 

and non-OPEC countries club adjust. That is gonna give us the possibility that example is very well 

known that from the last meeting we're having on the Doha up to now three million barrels out of the 

market because of different situations in Canada, in Nigeria. You know, what happen, who's gonna 

supply those barrels? Who have a need to adjust globally because we need to supply to the world with 

ninety five million barrels a day, and we need the investment to sustain, you know, that production of 

ninety five plus the increase demand. Ninety five million barrels a day, you know, with the declination 

rate that we have now present day. We need to supply nine million barrels to replace that declination, and 

that is where the point that you mention about the shale companies. I guess the shale is having like a roll 

of topping the price at this time. It is very well known that they are able to produce within range between 

$40 and $50. But this is also very well known that more than one thousand leaks less are used now in the 

shale region. It's also very well known that from the financial point of view, the financial legend that we 

use to sustain the decline of the price, you know, has been aspired. So, what is gonna happen after day we 

have more than three hundred wells drills but unconnected. That is a pool of potential production, but the 

declination rate of those reservoirs we know very well is very high. It seems the order of seventy per 

cent. What is gonna happen in the medium to long term when they need to recover maybe one million 

barrels a day, one million barrels a day is gonna mean to any thousand wells when they need to drill with 

more than one thousand ricks out of the market, how able that they gonna be, you know, reassure those 

rates. They need to recover 1 million barrels a day, that means 28 wells that they need to drill. With more 

than 1,000 rigs out of the market, how are they going to be able to reassume those rigs? Definitely, 

countries like the OPEC and Russia are the ones that are going to be able to produce efficiently and in the 

range of $70-80, when in the medium to long term is gonna be late event of price, when everyone cancels 

right and we can sustain the demand of oil that is going to be in the market for the next 2-3 years. If not, 

what is going to happen is huge change of price that is against this volatility that Igor showed in the 

slides, which is not good either for producers or consumers. In OPEC we do not agree with this kind of 

volatility. We have a responsibility to supply the world with that kind of energy and we need a price that 

can sustain the investment of required $300,000 less million in projects and fares. In the last 2-3 years 

underinvestment was huge and we are gonna see the impact of that in the next 2-3 years. That’s 

something that we need to correct. That’s why we support conversation between all the major oil 

producers, we invite to the international companies, we need to be included in those discussions because 

when I talk to the CEOs of international companies, they say, well, do you word or record the price? That 

what needs to be done together, you know. Not only the producing countries, it’s not only our 

responsibility. 

Nobuo Tanaka: Thank you, Eulogio. I cannot agree more to what has been said as a former executive 

director of IEA. Consumer countries suddenly concerned of this volatility, and some stability is necessary 

for oil pressure to be not loo low, but at the same time not too high. So, where is the best price? It’s a 

really difficult question to define, but certainty you’re right to say that. Mr Sechin, I have one question, 

this OPEC-Russia cooperation question. You are not a government official, but you have some influence 

in Russia government. What is a Russian policy about cooperation with OPEC countries?  

Igor Sechin: Well, we have Minister of Energy of the Russian Federation, and he is a government 

official, and he is in charge of coordinating all the activities that also involve OPEC. I think we can ask 

Mr Novak to answer this question. 

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Nobuo Tanaka: Minister Novak, can you answer?  

Alexander Novak: Thank you, Igor Ivanovich. Well. In fact, I’ve been answering this question for the 

whole day today and I’m very grateful to you to raising it once again. We’ve been discussing this issue in 

different formats. It was one on one meeting with mr Del Pino who shared the new developments at two- 

day appointment after the Secretary-General and the consensus parameters that were to establish the 

quotas that were discussed. But as I understand, OPEC is not yet ready to make a coordinated decision 

because there’re too many contradictions or disagreements inside OPEC. Speaking about my personal 

opinion and the opinion of the Ministry of Energy, we, despite the failure to reach a complete agreement 

at Doha, we still have to keep developing our dialogue with OPEC, because it is an organization that has 

been in an existence for more than 50 years, that unites a big number of oil-exporting countries, that in 

aggregate do have a lot of impact on the existing oil and gas markets. Russia as a major exporter and as a 

country that produces the biggest volume of oil globally has to be involved in discussing all the current 

and relevant issues that are on the reader’s screen today, and Russia has to discuss all the challenges that 

have been faced by the oil and gas industry as a whole. We are all aware of those challenges, but I’d like 

to emphasize that the reasoning for communication, the reasoning to communicate about development 

and continue the dialogue, both to keep developing two-sided relations with OPEC countries and 

multilateral relations with our colleagues who are members of OPEC 

Nobuo Tanaka: Thank you very much, Mister Minister. Let’s move to the next question to our front row 

participants. Mister Rex Tillerson, my question to you. Certainly Exxon is committed to the Russian oil 

and gas sector. Certainly the problem is the sanction. How do you see the US sanction on Russia? Do you 

see it’s moving away or this still insisting on that? Also there was discussion about this shale. How do 

you see the new technologies on the shale that is making it very resilient, or do you expect this situation 

continues? Is there any new technology which makes you think is important?  

Rex Tillerson: Thank you, Tanaka-san. Well. Ok. Thank you. As of the sanction question, I used to have 

the same approach as my friend, Mister Sechin. That is the question to the government. So, if there’s a 

US government official here, who would like to respond, I’d be happy to toss it to him. So, let’s move to 

the new technology. One of the underappreciate aspects of the technologies in gas business technology 

has played not just more recently across the history of our industry. It has been most potently 

demonstrated with development of the shale resources in North America in the last few years. But I think 

you really want to look across the history of the industry, because it always has been vital to the 

development of stable supplies of oil, neutral gas at affordable prices, reliably. And I realize that 

periodically the price goes beyond what is considered to be affordable, and often prices goes below what 

some people feel  is needed to stimulate investment. But if you look across long periods of time, the truth 

is the price has been at a level that has supported economic growth and development, in out developed 

world and in developing world as well. And I think that is a long-term obligation in this industry, this 

industry to meet the need for the stable supplies at a price the people and economies can afford, and it’s 

reliable. That has been enabled by entire technology, if we speak about the deep water or us moving to 

enormous expensive and natural liquefied gas resources to provide new supplies of alternatively cleaner 

low carbon impact fuels around the world, almost recently opening a commercial window to shale in 

North America. It is all underpinned by technology. Certainly public largely does not always understand 

it. Because all they want to know is the energy is available or I want it, it’s at a price I can afford it, and if 

It’s not it’s somebody’s fault. So, the industry has an enormous task to meet that public expectation, and I 

think it does it extraordinary well all underpinned by technology. In the past people worried over this 

industry. Today people are worrying about industry over carbon, and carbon-free sources of energy. I 

would say people worry about it prematurely just as technology has supplied the energy, technology will 

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be the pathway to the carbon future that we seek. We have to continue supplies of oil and neutral gas in a 

way that is less impactful, but it will be opening the doors to power that we can consume, that energy 

source in a less impactful way. And people who say “we must get of fossil fuels because…” really don’t 

believe in technology, they don’t have any faith in technology, they’re short in technology. And the only 

thing I’ve learned working for 41 years in these businesses, and I can say - never short technology! 

Nobuo Tanaka: Thank you very much, very interesting, very good point. I remember that you 

mentioned some time ago about the Exxon’s policies in a way when prices come down – investing 

though the cycle – is your strategy. You keep on doing that in this time?  

Rex Tillerson: Yes, we continue, yes, of course.   

Nobuo Tanaka: Simple another question. I’m sorry to ask you that. In Exxon, do you have internal 

carbon price also?   

Rex Tillerson: Yes, our energy forecast, we’re updating it every year, publish it. We set a carbon price 

for almost ten years and it’s around 40 dollar level. And in 2040 it will be around 80 dollars per barrel.  

Nobuo Tanaka: Ok, thank you very much. Next, let me ask Marco Troncetti of Pirelli. Pirelli is a tire 

company, right. And I was invited about a month ago to the Saudi Aramco’s board meeting with you. We 

raised the question that the new technologies in the electric vehicles like Tesla model 3 make a huge 

difference in an oil-demanding peak, oil demand may come sooner than later. Do you this this electric 

vehicle is real thing? 

Marco Troncetti: Thank you, Tanaka-san. We have to take into account that today’s car park, vehicle 

park is more than 1 bln, 2 mln electric vehicles, and the expectation is to have by 2020 about 17 mln. So 

it shows run, that image will not be abruptly changed. There are some game changes that could happen. 

The two game changes that we see are: first-the evolution of the batteries that raises another issue – that 

is the recycling of batteries, but the second game change is the attitude of China. China today invests a lot 

of in electric cars. And they remove the barriers they have to in the big cities. They produce more they 20 

mln cars every year, so the new cars – a large part of them is electric. So in the short run, there’s no issue. 

Nobuo Tanaka: For the car business, I think the future demand is in the emerging countries, like China 

or India. Pirelli’s strategies also investing into these major markets in the future. Yes?  

Marco Troncetti: Yes, we’re investing heavily in China, this is the premium segment. There we invest 

only to a premium iron segment. There are question of noise, rolling resistance, so there is a lot of 

technology requirements. We invest in Indonesia. So, we are everywhere, in every country. But the larger 

part of the investment today is US and Asia. These are our main drivers.  

Nobuo Tanaka: You are investing in Russia, also. 

Marco Troncetti: Yes, of course, we are investing in Russia as a very interesting market for winter 

times, high level of technology. Today’s market is a bit depressed for obvious economic reasons, but 

we’re using Russian basis for export , this is a very good basis, so we didn’t reduce our production and 

we continue to invest. And in 2017 we expect recovering Russian market, so we stay positive about 

investment in Russia.  

Nobuo Tanaka: Do you have internal carbon price? 

Marco Troncetti: No. 

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Nobuo Tanaka: No? 

Marco Troncetti: No, we continue to adapt our internal price to the one of the major oil companies. 

Nobuo Tanaka: OKAY. Good. Last but not the least. I will ask the question to Adi Karev Oil and Gas 

global leader of Oil and gas team. I will give you the most difficult question to answer. In you view, what 

is the most important risk or challenge for the global oil and gas sector now? Just pick one. 

Adi Karev: So if I do a quick calculation we have about almost 1000 years of experience here and you 

are asking me that question? I don’t think there is one most important risk but I will tell you this. I think 

that…I agree with everyone although not everyone states exactly the same comments and that gives me a 

balance to say that I was right. I think that the most important thing is the risk that we will not get to the 

stability of price that we need to, and the longer we will stand with the volatility the longer we have to 

experience that risk, the longer we will operate in the environment that has shown us more unknown than 

known, the more we will get closer to what Mr. Pouyanne said about the fact that we would be reaching 

the point where supply is substantially shorter than demand, the longer we will have an inability to make 

large investments on projects that Mr. Tillerson said are needed from the technology perspective. So, to 

me, the riskiest thing is the fact that we were used to having OPEC help us somehow control the price of 

oil and that we have found out in the last couple of years that they can’t control the price of oil and in fact 

none of us could control the price of oil. So we are operating in an environment where we found out that 

this lever is not within our control as we have thought. To me this is the riskiest thing. 

Nobuo Tanaka: What is the second? 

Adi Karev: Not recognizing the first. The second is that we were actually been long into the process of 

thinking that this is a fine act, that this is just one more thing that we’ve seen in the past and if we can 

weather the storm, or if we have large balance sheet, or if we somehow go through the financial process 

and we have capability to run through this we will end up in the same place we were before. That is to me 

the risk, because I don’t believe that would be the case. 

Nobuo Tanaka: Thank you very much. The time has almost passed to the 6 o’clock so I’ll return the 

microphone to Igor Sechin now. But as a moderator I’ve asked so many questions which I really wanted 

to ask myself. I’m so sorry that maybe it embarrassed some of you, I really ran a lot. I see these major’s 

CEOs under strong pressure of this uncertainty, instability of prices, market forces etc. But it is also true 

that this kind of discussion with major companies CEO’s gives us some hint of understanding the future, 

what they think about the current situation and preparing for the future. It is very difficult to see the 

future. When I was the head of the IEA the only thing I tried to avoid was just making any prediction 

about the future price, because I know I’m always wrong. But this kind of exercise is always interesting 

and I’m very much happy to come back this year and I hope that Igor Sechin, you will continue this kind 

of exercise in the coming years. And, finally, the floor is yours, Mr. Sechin. 

Igor Sechin: I’d like to thank all those present and also those who took part in our todays discussion. No 

doubt, I’d like to extend my sincere thanks to you, dear Mr. Tanaka-san, for your expert moderation of 

our panel discussion, because thanks to that it has become one of the most meaningful events of the St. 

Petersburg Economic Forum. And closing this panel with my words of gratitude I want to say that we 

have oil and gas, the technologies are here, provided that there is sufficient finance we will have no risks. 

Thank you very much. Thank you.