Page 17 - FSUOGM Week 47

FSUOGM POLICY FSUOGM

Russia needs response to EU

carbon border tax: Fedun

RUSSIA LEONID Fedun, the billionaire co-owner of time they will become more affordable.
Russian oil company Lukoil, has rejected that Lukoil expects oil exports to Europe to
Russia should focus Russia should seek to replace hydrocarbons with decline as a result of lower demand in the future,
on carbon offset using renewable energy, speaking in an interview with by as much as 50% by 2040, Fedun said. Com-
its natural advantages, Kommersant on November 24. menting on the oil market situation, Fedun said
rather than trying to Russia ought instead to focus on natural all Lukoil’s brownfield and a significant number
replace hydrocarbons CO2 sinks such as forests in order to offset its of its greenfield projects were profitable with
with renewables. emissions, he said. This should begin with a oil at $40 per barrel. The Russian government
reassessment of the CO2 absorption of Russia’s needs to support oil firms so they can invest in
vast forests, which were last assessed in the early new technologies to keep production profitable
2000s. at this price point, he said.
Fedun called for work to begin soon, given Lukoil is also scaling back its petrochemical
EU plans to introduce a carbon tax on imported plans, Fedun said, owing to changing market
goods, possibly as soon as 2021. European com- conditions. Fedun, who since 2012 has served
panies already pay some €30 ($36) for every as Lukoil’s vice-president for strategic develop-
tonne of CO2 they emit, under the EU’s emis- ment, said the company would only proceed
sions trading system (ETS), and the levy could with petrochemical projects that would make a
rise to over €50 per tonne in the future. return in the next 15 years.
European lawmakers want to apply the tax to “We will implement only those projects that
imported goods as well, including from Russia, are guaranteed to pay off by 2035,” he told Kom-
to avoid discriminating against domestic pro- mersant. “We are abandoning plans to build
ducers. Russian oil and gas producers could take giant petrochemical complexes, because the
a €1.0-3.5bn per year hit if the tax is introduced, market situation is changing and technologies
Fedun estimated. appear that make it possible to make almost
The Lukoil executive also proposed Russia set endless recycling of plastics.”
up its own ETS with voluntary participation by Lukoil and other Russian producers have
2025. This system would be accepted by interna- sought to develop petrochemicals as a means
tional partners and would allow Russia compa- of monetising their spare gas. In September
nies to avoid paying European CO2 taxes, he said. the company awarded a contract to Lummus
CO2 capture technologies are a good way Technology for technology for a grassroots
of dealing with the carbon tax issue, Fedun petrochemicals plant in the Nizhny Novgorod
explained, and although their cost is high, in region.™

Russia to lend $650mn to help Uzbekistan

ramp up oil and gas output

UZBEKISTAN RUSSIAN state bank VEB.RF, in partnership agreement on opening a credit line of up to EUR
with other Russian banks, is set to provide 40mn to finance the supply of Russian high-tech
VEB.RF and Uzbekistan's national oil company Uzbekneft- products, the performance of works and the ren-
Uzbekneftegaz have egaz $650mn in credit to help it expand dering of services designed to modernise pro-
signed a memorandum production. duction facilities in Uzbekneftegas.
on the issue of $650mn VEB.RF and Uzbekneftegaz signed a memo- Since assuming power in late 2016, Uzbek
of credit. randum of understanding on the funding. President Shavkat Mirziyoyev has sought to
"The Republic of Uzbekistan is one of VEB's expand national oil and production by attract-
leading partners for Russia in a number of pro- ing more international investment and under-
jects. As part of our efforts to strengthen Rus- taking reforms. But despite signs of progress, the
sian-Uzbek trade and economic cooperation, we country has been unable to reverse a decline in
and our partners from Uzbekistan announce the production.
expansion of cooperation in the field of financ- Russia has a dominant presence in Uzbek-
ing projects in the oil and gas industry," said istan's upstream sector, with Lukoil serving
Daniil Algulyan, Deputy Chairman of VEB.RF. as the country's single biggest foreign direct
This month has seen the parties sign an investor.™

Week 47 25•November•2020 www. NEWSBASE .com P17