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Rosneft CEO dangles possibility of working with ENI in Russia

by Antonella Scott

Igor Ivanovich Sechin, oil baron, one of the most influential people in Russia, is a very close advisor of President Vladimir Putin from back when the two worked together on the staff of mayor Anatolij Sobchak, who transformed Leningrad into St. Petersburg.

Today, Sechin helms Russia’s biggest oil company, Rosneft. The eve of the St. Petersburg International Economic Forum, where Italy is the guest of honor, will mark an important step in Italy’s relationship with Russia. The CEO of Rosneft will also seek closer bonds between his company and our nation.

In an interview with Il Sole 24 Ore - ItalyEurope24, Sechin discusses the great challenges of the day — from falling oil prices to the privatization of a stake in Rosneft; from tumultuous relations with OPEC, to sanctions that directly involve his company: He also talked about a dream, first planted by former ENI chief Enrico Mattei: working with an Italian energy company on a major drilling project in Russia.

SCOTT: Igor Ivanovich, the time is nearing when the European Union will decide whether or not to extend sanctions on Russia…

SECHIN: We work with the market conditions we are dealt. I can give you my opinion of sanctions by our European and American partners: sanctions damage all participants in economic activity that are outside the political arena.

Prolonging sanctions at a corporate level is unjustified and illegal and it violates the basis of contract law. We have no reasons for tension with our partners. Rosneft respects all its contractual and financial obligations towards its EU partners, invests in assets that are successful in Europe, like the petrochemical sector in Germany or Italy. That’s how to form a basis to work together and enhance the level of reciprocal trust.

SCOTT: The St. Petersburg International Economic Forum will be particularly important for Italy and for its relations with Russia. What do you anticipate from these three days?

SECHIN: Daily, systematic effort underlies the basis of our cooperation. The Forum is a good path to move closer to specific results. And it's especially significant that Prime Minister Matteo Renzi will attend. In the ‘60s, ENI founder Enrico Mattei, having closed a long-term oil supply deal with the USSR, broke the protocols of the Cold War, which, among other things, presupposed the economic isolation of Russia. Defending the agreement signed with Moscow, Mattei assured everyone that “it didn’t constitute a danger to Italy, that on the contrary it would guarantee oil to the country and jobs to Italians.” And he was sincerely pleased by the fact that the “wolf that nurses Romulus and Remus finally married the famous Russian bear.”

That’s why it’s precisely thanks to Russian oil, to the energy bridge built by the efforts of Mattei and his Soviet partners, that relations between Russia and Italy have had a solid foundation for decades. And, naturally Rosneft continued that tradition. It collaborates with Italian firms cross all sectors: from exploration to production, from refining to logistics. Last year alone, we sent to Italian ports almost 16 million tons of oil and derivatives worth $5.7 billion.

No less, with our key Italian partner, ENI, we’d like to broaden our cooperation to include the entire technology chain: geological exploration, drilling, processing, technology development. We are working with ENI on joint projects on continental platforms. And I won't exclude that over time we’ll be able to take part in realizing the dream of Mattei — the Italian oil giant participating in a major energy project in Russia.

SCOTT: In Europe, we lament our dependence on Russia oil but are immediately worried when Moscow looks towards Asia. Could the Chinese market become more important for Russia than the European market?

SECHIN: For a series of objective reasons, the European energy market will remain the primary market for Russian hydrocarbons for decades. It was for a long-term relationship that such an enormous infrastructure was created, in terms of ports and pipelines.
It’s enough to say that Rosneft holds a leading position in the oil and derivatives market from Germany. And now the growth rates of European markets are slowing, compared with Asian markets where intense growth of consumption is noted.

In addition, extraction of new gas and oil is increasingly happening mostly in Eastern Russia. In this situation it makes sense that this new oil and gas is targeted to the market that is closest and is growing more rapidly, Asia. But that's nothing to worry about: in Rosneft’s export structure, China makes up 13%. It’s a normal diversification of destination markets.