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Kremlin investor show attracts top oil players, but few deals

Thu, 16th Jun 2016 17:49

* Gazprom-Shell sign only significant deal

* Rosneft boss tells investors about U.S., Saudi risks

By Dmitry Zhdannikov and Katya Golubkova

ST PETERSBURG, Russia, June 16 (Reuters) - Global oilcompany chiefs showed up in force to Russia's main investor showon Thursday, but deals were slow to materialise as they blamedlow crude prices for cutting their scope to invest.

Bosses of firms such as BP and Exxon Mobil also got plentyof lecturing from their hosts about uncertainties surroundingthe U.S. presidential election and an economic overhaul in SaudiArabia, while CEOs carefully avoided mentioning sanctions stillin place on Moscow over the crisis in Ukraine.

Gazprom signed an exploratory deal with Royal Dutch Shellover the Anglo-Dutch firm's possible involvement in the Russiangas giant's $10 billion gas export project from the Baltic Sea.

Russia's Rosneft was preparing to rubber stamp a number ofpreviously agreed deals with Italy's Eni and some Indian firms.

But a generally thin deal pipeline contrasted with thebillions of dollars worth of deals that Russia, the world'slargest oil and gas exporter, used to sign at the St Petersburgeconomic forum before 2014. That year, Russia annexed Ukraine'sCrimea peninsula and backed pro-Moscow separatists in easternUkraine, incurring Western sanctions.

The deal flow appeared even smaller than it was in 2015, asoil companies around the world cut capital investments for thesecond straight year following a steep fall in oil prices.

"The oil industry has dramatically reduced its investment,"Total CEO Patrick Pouyanne told a panel with investors.

The drought of new deals comes as a setback for the Kremlin,which managed to lure back to the forum top executives from U.S.oil majors Exxon Mobil and Chevron, including Exxon CEO RexTillerson.

"If there is a U.S. official in the audience, I'm happy totoss it over to them," Tillerson said, when asked about theimpact of sanctions on his investments in Russia.

Still, local officials were on a charm offensive, sayingRussia's investment potential was rising amid uncertaintyelsewhere, particularly in the United States.

Igor Sechin, the chief of Kremlin oil major Rosneft, whichproduces more energy than Exxon, said more resources were beingdiscovered in Russia and a steep rouble devaluation was helpingcost-cutting.

Sechin, a close ally of President Vladimir Putin, alsoargued it was hard for the industry to assess prospects inRussia's top two energy rivals - the United States and SaudiArabia.

Sechin said he thought if Republican Donald Trump won theupcoming U.S. presidential election, conventional oil and gasproducers would benefit. If Democrat Hillary Clinton won, therewas likely to be less support for fossil fuels and more forgreen energy, he added.

"Given the role that the U.S. economy is playing globally,uncertainty over the development of the U.S. oil and gasindustry is increasing the risks for the global economy," Sechinsaid.

Turning to Saudi Arabia, he said it would have to go throughpainful reforms as it was only set to cut its budget deficit to$85 billion in 2016 from a record $100 billion in 2015.

Pouyanne, whose company Total has major projects in theMiddle East, said he was keen to invest both there and inRussia.

Total is an investor in the $27 billion Russian Arctic Yamalgas project which earlier this year managed to secure financingfrom Russian and Chinese banks after repeated delays.

"It was difficult ... But we continue to invest in Russiadespite sanctions ... In Russia you can find some of the lowestcost resources in the world," said Pouyanne. (Writing by Dmitry Zhdannikov; Editing by Alessandra Galloniand Mark Potter)

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