Review of new and potential hydrocarbon fields in Russia based on 2010 results
The current situation in the Russian oil industry can be described as follows:
- Despite considerable governmental efforts to develop oil and gas production in East Siberia and the High North, the Volga-Urals Region and West Siberia will remain the key regions in terms of hydrocarbon production over the next decade.
- At present, oil reserves are 50–70% depleted in the Volga-Urals Region and more than 45% depleted in West Siberia; furthermore, no new major oil fields have been discovered in West Siberia – the key oil-bearing region – over the last 20 years.
- For 2010, additions to hydrocarbon reserves amounted to 750 million tons of oil and 810 billion cubic meters of gas (in 2009: 620 million tons and 580 billion cubic meters, respectively).
- There are 53 new major hydrocarbon fields in Russia (including on the Russian shelf of the Arctic Ocean, Caspian Sea and Sea of Okhotsk), development of which has already started or is planned for the foreseeable future.
- These fields contain a total of approximately 4.9 billion tons of oil and condensate and 28.3 trillion cubic meters of gas.
- Among them, 14 fields, or 25% of all fields, are under commercial development.
The following factors complicate the commercial development of new fields and, correspondingly, maintenance of the existing levels of oil and gas production:
- The necessary infrastructure is absent or inadequately developed in the new and promising hydrocarbon production regions.
- The most promising fields are located in regions where climatic conditions are extremely severe.
- Russian companies lack state-of-the-art oil and gas production technologies; especially concerning shelf operations.
The measures proposed by the government in order to prevent progressive decline in oil production and accelerate new field development may be divided into three groups:
- Providing oil companies with tax benefits such as export duty exemption, application of reduced income tax rate, tax holidays with respect to the mineral extraction tax, etc.
- Constructing the necessary infrastructure, first of all, transportation facilities.
- Actively attracting foreign partners.
Based on the above, there are two potential scenarios for industry development:
- At current rates of commissioning new capacities, oil production will decline from 500 million tons in 2010 to 388 million tons in 2020 and 228 million tons in 2030.
- If the oil industry taxation system is modified and if significant benefits are granted to oil companies in order to promote new field development, production will increase to peak at 571 million tons in 2017. However, starting from 2018 oil production will gradually decline, and oil companies will be producing 547 and 346 million tons of oil by 2020 and 2030, respectively.