US special envoy - RBC: Russia must play by the rules of the EU energy market

US State Department Special Envoy for International Energy Affairs Amos Hochstein told RBC about the European energy security, oil prices and the desire to talk to Igor Sechin.
Origin source
After many years of declarations on the need to remove the dependence on Russian gas, Europe has moved from words to deeds: last year alone, has developed a comprehensive strategy for energy security and the proposed Energy Union project. An active role in supporting this process is played by the United States, and oversees this area special envoy of the State Department on international energy issues Amos Hohshteyn. RBC talked to him about the Russian gas in Europe, the world prices for oil and opinions Igor Sechin at the shale boom in the US.

"Great progress"

- In the US media, I read that you often visit European capitals, where they discussed issues of energy diversification in Europe, in particular the reduction of import dependence on Russia. Your trip to Europe increased after the beginning of the Ukrainian crisis in March 2014?

- Of course, the United States see in European energy security a critical component of economic security, national security, but the same can be said about any other part of the world. In fact, there is not much differentTzu, whether we are talking about energy security in Central America, the Caribbean, Europe, Asia, Middle East and so on. Each country should be able to not depend on a single supplier, the use of competing energy sources in the event of disruptions in supply. Competition in the supply - this condition is energy security. So we are working with our friends in Europe, in order to determine how to do it, and implement it. I do regularly travel to South-Eastern Europe, Central Europe, but I do it from the moment you begin to work at the State Department in early 2011.

- Since the beginning of Ukrainian events, nothing has changed?

- I think that my trips are more concerned with the gas crisis of 2009, when "Gazprom" cut off gas supplies to Ukraine and, consequently, the supply in those European countries that receive gas transit through Ukraine. It was then that we realized that, once such a situation has arisen, it can be repeated again and again. It was therefore necessary to take all possible steps to keep goingSuitable risks minimized. My trip to Europe, dating back to early 2011, and we will continue these efforts as long as do not create a functioning diversified energy supply system.

- Since 2009, Europe has advanced in energy security? On the one hand, on the subject has always been done a lot of applications, on the other - conducted conversations with the 1980s, but as the Europeans bought Russian gas in large volumes, and continue to buy.

- I see great progress in Europe to diversify energy supplies, and these changes are not only of a physical nature: they are visible and on the mental, psychological level, and the political. I am convinced that Europe has come to realize that if you are faced with a gas crisis, created for political reasons, as in 2005, 2009 and 2014 [episodes of "Gazprom" dispute with Ukraine, which led to disruptions of gas supply], then such situations so and will be repeated if sit back. I think that the Europeans finally seriously realized it was time to act.

- Kas "mental" and "political" steps taken with the aim of Europe once and for all get rid of the threat of supply disruptions?

- The European Union recently [in November 2014] has started to work the new composition of the European Commission, they have made changes in the organizational structure and, in particular, introduced the post of Vice-President for Energy Union - before this position does not exist. This is one of the indicators of the fact that energy security strategy began to be realized. They are trying to realize the physical changes, changes in regulation, which will help eliminate the risks to energy security. Finally, Europe has implemented "Third Energy Package" - a new set of rules and guidelines in the energy sector. One element of the reform is the abolition of the position of the destination [destination clause, a condition that prohibits gas importer to resell it to a third party]. Precisely because of this we were able to ensure Reverse gas supplies to Ukraine from Hungary and Poland, and later in Slovakia, after the June "Gazprom" has stopped the supply of gas to Dowere Rain. This was possible only because the advance has been a change in EU legislation. That's progress. Also, the physical infrastructure that allows to supply gas in the opposite direction, was created in advance and come in handy after the Crimean crisis.

- So often underestimated progress in Europe?

- All of the above shows that the media and other observers underestimate this progress. Meanwhile, the US spends great efforts and work shoulder to shoulder with Europe to conduct further conversion. Do not underestimate the progress made in this direction. But I want to emphasize that despite the massive progress, there is still much to be done to achieve true energy security through diversification of supply genuine.

"The differences - this is democracy"

- But the differences between the EU countries still remain: for example, the same as Hungary recently opposed to the European Commission monitored the gas agreements with third countries, such as Pssia.

- First of all I want to say that I like in a democracy, it's differences of opinion. Everyone should have the right to express their views and to convey their position. In the end, this is democracy. In some countries, this fear, but I only welcome. There is no country in the world that knows of all, as they will be better. EU - a community of states, and, naturally, they should discuss such issues, to argue. Despite the disagreements really, we have achieved all the progress that I have already said. Similarly, in spite of the differences in the issue of sanctions against Iran or Russia, the United States and the European Union were able to establish rapport. In the EU, decisions are taken unanimously by all member states, and such examples are much more than those that take decisions failed. To this should be viewed as a living process, and not just as a final authority on decision-making.

For those regulations, which offered the Vice-President Maroš Šefčovič [Commission proposes to endow it more weighty powers of control over the intergovernmentalagreements the EU Member States and third countries, such as Russia], now in Europe will begin the discussion, and the Europeans will necessarily come to a common understanding and agreement which elements to adopt and which to reject. It's none of my business and not the business of the United States - to decide which laws and regulations need to be in Europe. But the proposal of the European Commission - it is a very positive step, and the United States fully supports the Europe in the process of developing regulations that will provide them with energy security. This is our goal: to motivate Europe to their own actions to protect their own interests. I do not know how they are to this will come, do not know how they will negotiate, what negotiating position will take and how it will look the final document, but the very fact that such a discussion is conducted, was inconceivable, in the opinion of many experts, only a year ago. And I truly believe that US efforts in this matter, and our partnership with the European Union contributed to the progress.

- What else can play the role of the US in this process?

- There are many things that we can offer Europe and are already osuschestvlyayutsin one way or another: it is the experience that we have in this area and support in advancing the negotiations. For many years we have been a guiding force in matters of energy security. As you may have noticed earlier, the concept of energy security in Europe, in the US interest, originated decades ago. We have always been committed to this task, as firmly convinced that energy security - is part of the national security and the national security of Europe - high-order priority for the United States. Of course, our industry is actively involved in the European economy, our LNG exports to begin in late 2015 - early 2016, so we will have an impact on this market.

- A Russian in the future will be a place in this market?

- I want to clarify one important thing: Russia can and should be a big part of the European energy sector, energy market. Russia - one of the world's largest manufacturers [oil and gas], it is adjacent to Europe, has existing infrastructure, so it is reasonable that the Russian Doljand be part of the European market. But this is possible only if it is ready to play by market rules, relate to energy supplies as a component of the economy, not politicians, to see this as a means of prosperity, economic growth and not an instrument of political influence. We are not trying to squeeze Russia from the market, on the contrary - we want Russia to be in this market, they compete with the Norwegian gas from the North African gas to the American gas with gas from the Eastern Mediterranean, from any other region. But we are in favor of that consumer countries can take free decisions without coercion and without threats. This is not possible if the infrastructure [gas transportation] is constructed as a political rather than an economic project. If Russia changes its attitude to this, it will be able in the future to play a huge role as one of the main suppliers of energy resources to Europe, but the Europeans have to enter the security mechanisms to ensure that the diversity of suppliers to the decisive role played by market forces, not political.

"I would be glad to talk with Sechin"

& mdash; Let's talk about the latest trends in the global oil market. Why did the price of oil fell, and what to expect next? And how to cope US shale industry (given that in Russia there is a perception of the shale boom instability)?

- Oil markets are by nature volatile. There are years when the prices are very high, but behind them are usually followed by years of significantly lower prices. The reason is very simple: a long period of high prices leads to increase production, as people see value in additional investments. At some point, the proposal becomes redundant. But this time, a notable feature is the coincidence of two factors: the unexpectedly strong production growth due to the US shale boom (plus production growth in the smaller producing countries) and the economic slowdown in China and partly in India, that is, slowing demand from major consumers of oil . Reduced growth in demand and increased supply led to a glut. Shale oil looks vulnerable to low prices, and a few months ago, many expectedmerikanskaya production will decline rapidly. But that did not happen. Production in the United States and Canada was much more stable than expected. And even if prices remain at the current level [$ 49/57 on the WTI / Brent in the day of the interview], production in the US will still remain high.

- What is your forecast for the price?

- I am not prepared to speculate on what will be the price of oil, because they do not know a single person who could successfully predict such things. If I could, I would have had another job and I would have earned much more money than it is now (smiles). The volatility in the oil markets is usually associated with two factors: first - the curve of demand and supply, and the second - the level of geopolitical instability in areas that have traditionally been the driver of demand or supply. The balance of supply and demand is now pulling down prices, while geopolitical risk is not so great, so prices are what they are. It is necessary to change one of these variables, and we will see changes in prices.

- The head of Russia's largest oil company "Rosneft" Igor Sechin weekclearly spoken at industry forum in London and said that the US shale industry reminds him of a "bubble" of the dotcom collapse. Sechin is not right?

- I do not want to argue in the media with Igor Sechin, but I want to say frankly: I would be glad to talk with Mr. Sechin on the future of oil markets and the analysis of the oil shale industry of the USA! I think that just such discussions between the US and Russia we are all missing. I am ready to agree with him that there are some elements of the device market, which is worth a look, and perhaps explore more closely, including economic analysis of companies operating in the oil shale industry. But sometimes there are facts which are capable of putting an end to all disputes and without a thorough analysis. In our case, the facts are that the oil price is now low - 50% below the previous peak, and oil shale extraction continues at a high rate. Important US Unlike many countries in the world is that we have no energy companies owned by government-owned. We do not dictate to companies when and how to produce and at what prices. They take libertiesnye market solutions. If they lose money or their debt is too high, they just stop working. The fact that they continue it, speaks for itself. We really free market, hundreds of manufacturers operating in the oil shale industry, and they do not listen to me, nor the US President, they listen to their shareholders and financiers. And while the US industry's stability does not disappoint, but it all just amazing. She was stronger than many expected.

Amos Hohshteyn

It works in the US State Department since 2011. Since August 2014 has served as Special Envoy and Coordinator for International Energy Affairs at the US State Department Bureau of Energy Resources (the appointment was officially announced in December). Hohshteyn oversees US foreign policy part "at the junction of the energy and national security," it said in reference to the Department of State website. He acts as advisor to US Secretary of State John Kerry on global energeticheskoy security and diplomacy.

Before coming to the US administration he worked in the Washington firm Cassidy & Associates, which specializes in GR (Government relations).

Over the past year, According to Reuters, Hohshteyn engaged European and, in particular, Ukrainian direction, held consultations with the European countries on the replacement of Russian gas supply alternative. He also worked on energy issues related to sanctions against Iran, and Russia.