Without significant investment, technological breakthrough, changes in regulation and the lifting of Western sanctions, Russia could face a precipitous drop in oil production in the coming decades, and in the worst case, completely disappear from the global oil market. The government included this forecast in the Energy Strategy until 2050, which was approved by Prime Minister Mikhail Mishustin on Monday.
According to the document, in the “inertial scenario”, which “assumes the preservation of existing trends and current approaches in the fuel and energy sectors”, oil production will decrease from the current 530-540 million tons per year to 477 million tons by 2036, and by 2050 to 287 million tons, that is, almost half of the current levels. Oil exports will have to be cut threefold, from 234 to 79 million tons per year.
In the "stress scenario," which includes increased Western sanctions and the world's accelerated rejection of hydrocarbons, Russia will produce only 171 million tons of oil annually by 2050, three times less than it currently does. And there will be no barrels left for export: its volume will drop to zero.
The oil and gas sector provides a third of budget revenues, a third of all investments in the country, and two-thirds of the economy's foreign exchange earnings. But "in terms of oil production and exports, if current trends continue, there are significant risks of a reduction in production volumes," the strategy says. Old fields discovered during the Soviet era are gradually being depleted, and new ones with cheap and easy-to-extract oil cannot be found. In addition, high taxes for oil companies and "limited access to technologies for both development and exploration of reserves" are having an impact, the document says.
According to the strategy, there are 31 billion tons of proven oil reserves in the Russian subsoil, which could be enough for 65 years of production. However, a third, or more than 10 billion tons, are currently “unprofitable.”
In order to maintain the current level of oil production (“target scenario”), significant investments are required, as well as the achievement of “technological sovereignty,” according to the strategy. In total, according to the document, it is necessary to “replace” more than 1,500 items of “critically necessary equipment.”
In the meantime, the Russian raw materials industry remains almost completely dependent on foreign technology. The share of imported drilling equipment, as well as analytical software for mining currently exceeds 90%. According to the Ministry of Natural Resources, 50% of mining machines and 30% of ground geophysical equipment remain imported. The dependence on imports of equipment for technological research (20%) and geophysical equipment for well surveys (10%) is slightly less. In Russia's main oil region, the Khanty-Mansi Autonomous Okrug, which accounts for almost half of all barrels extracted from the earth's crust, production is already rapidly declining, notes oil and gas market expert Mikhail Krutikhin: in 2007-08, 280 million tons were pumped there annually, while last year, only 205 million tons. And according to forecasts from the Khanty-Mansi Autonomous Okrug authorities, in the worst case, production will decrease by another 40 million tons by 2030, and more than threefold by 2050.
There are 9.1 billion tons of Category A oil reserves in Russia, that is, proven, already involved in exploitation and with well-studied characteristics. However, the experience of operating companies at the fields shows that in fact, there are half as many commercially viable reserves left in the country - about 4.3 billion tons, and they could be exhausted in about eight years, warns Krutikhin.
According to the document, in the “inertial scenario”, which “assumes the preservation of existing trends and current approaches in the fuel and energy sectors”, oil production will decrease from the current 530-540 million tons per year to 477 million tons by 2036, and by 2050 to 287 million tons, that is, almost half of the current levels. Oil exports will have to be cut threefold, from 234 to 79 million tons per year.
In the "stress scenario," which includes increased Western sanctions and the world's accelerated rejection of hydrocarbons, Russia will produce only 171 million tons of oil annually by 2050, three times less than it currently does. And there will be no barrels left for export: its volume will drop to zero.
The oil and gas sector provides a third of budget revenues, a third of all investments in the country, and two-thirds of the economy's foreign exchange earnings. But "in terms of oil production and exports, if current trends continue, there are significant risks of a reduction in production volumes," the strategy says. Old fields discovered during the Soviet era are gradually being depleted, and new ones with cheap and easy-to-extract oil cannot be found. In addition, high taxes for oil companies and "limited access to technologies for both development and exploration of reserves" are having an impact, the document says.
According to the strategy, there are 31 billion tons of proven oil reserves in the Russian subsoil, which could be enough for 65 years of production. However, a third, or more than 10 billion tons, are currently “unprofitable.”
In order to maintain the current level of oil production (“target scenario”), significant investments are required, as well as the achievement of “technological sovereignty,” according to the strategy. In total, according to the document, it is necessary to “replace” more than 1,500 items of “critically necessary equipment.”
In the meantime, the Russian raw materials industry remains almost completely dependent on foreign technology. The share of imported drilling equipment, as well as analytical software for mining currently exceeds 90%. According to the Ministry of Natural Resources, 50% of mining machines and 30% of ground geophysical equipment remain imported. The dependence on imports of equipment for technological research (20%) and geophysical equipment for well surveys (10%) is slightly less. In Russia's main oil region, the Khanty-Mansi Autonomous Okrug, which accounts for almost half of all barrels extracted from the earth's crust, production is already rapidly declining, notes oil and gas market expert Mikhail Krutikhin: in 2007-08, 280 million tons were pumped there annually, while last year, only 205 million tons. And according to forecasts from the Khanty-Mansi Autonomous Okrug authorities, in the worst case, production will decrease by another 40 million tons by 2030, and more than threefold by 2050.
There are 9.1 billion tons of Category A oil reserves in Russia, that is, proven, already involved in exploitation and with well-studied characteristics. However, the experience of operating companies at the fields shows that in fact, there are half as many commercially viable reserves left in the country - about 4.3 billion tons, and they could be exhausted in about eight years, warns Krutikhin.
