Vladimir Putin held a meeting via videoconference on developing the fuel and energy sector, presidential web page reports.
“Energy is a key sector of the national economy and largely determines the export capacity of Russia and the state of public finances,” he said. “Modern Russian fuel and energy sector employs 2.5 mio people and is a high-tech industry.”
As Putin noted, “Both the Russian and the entire global energy industry have gone through serious upheavals in the recent months. These problems are of a systemic nature and extend beyond national borders. This is not the first time that the global energy market has faced sharp, dramatic fluctuations. True, there has never been anything like this. So the main task is to provide for long-term stability in the entire Russian fuel and energy industry.”
As Energy Minister Alexander Novak reported, “Last year, the fuel and energy industry accounted for 25% of Russia’s gross domestic product, almost one-fourth of all the investment in the Russian Federation and almost 40% of the federal budget.”
He pointed out though, that at the moment Russia is “nearing the lowest possible demand for oil. The period of unprecedented volatility also continues at global stock exchanges. The storage facilities for oil and petroleum products continue to fill. Uncertainty also remains around the timeline of global economic recovery. The demand for petroleum products in northern and central Europe fell by 10–15%. In April, the retail demand for petrol in Russia fell by 40–50%, and for diesel fuel by about 30%. The fall in consumption of jet fuel exceeded 50%. Yet petroleum prices have not changed since earlier this year, and price increases for diesel fuel are within inflation values.”
According to Novak, energy companies “are currently preparing to cut production. In May, this reduction will be about 19% compared to February 2020. The fall in demand for oilfield services can amount to anywhere between 30 and 40% and, in some cases, even more. The decrease in electricity consumption has been about 3% since March 30, 2020. Several industries have reported a decrease in consumption, for example, 22% in engineering, 7% in railway transport and 3% in metallurgy. In April, coal production dropped by 10.3% compared to the same period last year.”