Save for later Print Download Share LinkedIn Twitter While there is a perception that Russia has been slow to embrace the energy transition, international oil companies (IOCs) and top commodity traders still view the country as ripe in opportunities despite their enhanced focus on low-carbon initiatives (PIW Oct.2'20). Russia's huge low-cost, low-carbon oil and gas reserves are keeping it in the industry's good graces -- even for the European majors with the most aggressive decarbonization and energy transition strategies. Last week's St.Petersburg International Economic Forum attracted heads of top IOCs, including BP's Bernard Looney and TotalEnergies' Patrick Pouyanne; bosses of the world's largest commodities traders, including Trafigura's Jeremy Weir, Glencore's Ivan Glasenberg and Gunvor's Torbjorn Tornqvist; and CEOs from leading service companies, like Baker Hughes' Lorenzo Simonelli. High-level officials from Exxon Mobil, Chevron and Royal Dutch Shell also attended one of the largest offline industry events of the past 18 months. In another sign of the tectonic changes shaking energy markets, the issues of climate change, emissions cuts and green projects were a key part of the St. Petersburg agenda for the first time. Western majors said upstream projects in Russia fit their low-carbon strategies and they see further opportunities in the areas hydrogen and carbon capture, utilization and storage (CCUS). BP's Looney reiterated that Russia remains an important country to the company, which owns 19.75% in top Russian oil producer Rosneft. According to David Campbell, BP's head of Russian operations, "Russia fits very well with BP’s new strategy," mainly because of the "resilient, focused" hydrocarbons it offers. He also said there could be scope for cooperation in new low-carbon projects, including renewables. Shell, which recently entered a partnership with Gazprom Neft for the development of two frontier regions on the Gydan Peninsula, signed another memorandum with the Russian firm for exploration and production, technological collaboration and carbon footprint reduction. Shell's Russian head Cederic Cremers explained to Energy Intelligence that the company would "stop entering new frontier basins after 2025," but "until that time we will continue to enter new frontier projects." Projects in Russia fit the bill because "they rank as one of the lowest-cost and lowest-carbon sources." Russia’s vast gas reserves and its potential to export LNG to growing Asian markets is another draw for IOCs, particularly as gas comes under greater pressure in climate-minded Europe (PIW Apr.9'21). But again, decarbonization will be crucial. "The future of LNG is low-carbon energy," Pouyanne insisted. TotalEnergies, a shareholder in Russia’s second-largest gas producer Novatek and in its Yamal LNG and Arctic LNG 2 projects, insists Russia remains central to its strategy despite a bigger focus on renewable power. Russia has low-cost gas reserves and good opportunities to develop wind and solar power to supply LNG plants, reducing their CO2 emissions, Poyuanne said. TotalEnergies is particularly enamored with wind power possibilities in the Arctic. The firm recently expanded its presence in Russia by acquiring a 10% stake in Novatek's LNG transshipment projects in Murmansk and Kamchatka, which are aimed at reducing LNG transportation costs. It also signed a memorandum with Novatek to reduce their Arctic LNG carbon footprint by developing CCS, hydrogen, ammonia, and renewable power at joint projects. Big traders including Trafigura and Vitol also see opportunities in Russia amid the energy transition. IOCs' deep cuts to upstream spending have presented chances for traders to expand their upstream presence and potentially seize on higher prices from any supply crunch that may arise in coming years (related). Rosneft boss Igor Sechin warned that a crunch could be a side effect of the energy transition. Traders Vitol and Mercantile & Maritime Energy this week signed an agreement to take a 5% equity stake in the Rosneft-led Vostok Oil megaproject in the Russian Arctic. Vostok, in which Trafigura holds 10%, is expected to produce 600,000 barrels per day by 2024 and 2 million b/d by 2030, a timeframe when oil demand should still be robust. Trafigura's Weir said Vostok is "low-cost, low-carbon intensity and high-quality oil that will be required for many years," and that additional efforts to decarbonize these reserves "will further secure demand."