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Different approaches towards Russian oil industry: search for strategic development vector

Different approaches towards Russian oil industry: search for strategic development vector

The latest official forecasts of the oil sector development have rather gloomy outlooks.

Even in its best scenario the economic development ministry predicts production to grow by less than 3% by 2030. The content of the 2035 Energy Strategy does not differ much. Meanwhile, according to the pessimistic forecast of the economic development ministry, production may fall by 14%.

The main question is how to avoid it when production in the Khanty-Mansi Autonomous Area that is a traditional oil province has negative dynamic.

It is necessary to find a substitute for production at traditional Western Siberian deposits in the medium-term perspective. Otherwise the sector and the Russian budget in general will face problems.

Russia has to choose between three options: offshore deposits in the Arctic, Eastern Siberia and non-conventional oil in Western Siberia. Lobbyists of these directions draw excellent prospects. The question is how wonderful these ideas are in reality and whether these options are really good.

However, it is impossible to have strong standing in all these spheres simultaneously. Thus, the state has to make its choice. Especially given that these projects can be implemented only within the framework of special taxation procedures that result in decline in state budget revenues. This is the reason why the state is very cautious about such plans.

The new report tries to figure out what variant is the most alluring.

Key topics of the report:

  • Evolution of official forecasts of the oil industry development

    • Viewpoints of Vladimir Putin, economic development ministry and energy ministry on the sector’s future
    • The latest variant of the oil industry’s future in the Energy Strategy
  • Eastern Siberia

    • Is it possible to go beyond Vankor project?
    • Analysis of the region’s resource base, reasons for serious lag in the pace of development of this oil and gas province
  • Offshore deposits

    • Rare success amid loud debates
    • Absence of clear strategy of offshore development
    • Economy of new offshore projects
  • New projects in Western Siberia

    • Analysis of pros and cons
    • Hard-to-recover deposits with ready infrastructure on their transportation to markets
    • Prospects of Bazhenov and Abalak formations and other hard-to-recover deposits in the region
    • Who will bring technologies? Prospects of cooperation with nonresidents
  • New foreign policy context, state choice

    • How do three projects blend with a new political conjuncture
    • Cooling of relations with the West and attempts to accelerate reorientation of exports towards the East?
  • Taxation preferences

    • Who will get state concessions?
    • Discussion of taxation procedures for offshore, Eastern Siberian projects and hard-to-recover deposits in Western Siberia
  • Medium-term forecast of developments

Contents of the report:

Introduction 3
Chapter 1. Search for new ways of development. Official forecast of the oil industry’s future 4
Chapter 2. Eastern Siberia – region of one project? 14
Chapter 3. Offshore production development 24
Chapter 4. Tight reserves – panacea or another trick? 37
Chapter 5. Russia’s strategy on world oil and gas market 46
Medium-term forecast of developments 52
Date of release: May 30, 2014

If you are interested to obtain please contact » Elena Kim

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Analytical series “The Fuel and Energy Complex of Russia”:

Sanctions against Russian Oil and Gas: Pressure Continued
Arctic: Soviet-type Gigantomania or Breakthrough Project?
State regulation of the oil and gas sector in 2018, prospects for 2019
Gazprom on Path to New Reality
Looking for Best Tax Treatment of Oil and Gas: Fiscal Experiments Continued
The subject of taxation became the absolute hit of 2018. The government once again decided to rewrite the rules of the game. President Putin’s new inauguration decree served as the main pretext. It turned out that about 8 trillion roubles extra was necessary for the new national projects announced. The Cabinet did not take long to decide where the funds should be taken. The result was acceleration of the so-called tax manoeuvre started as far back as 1 January 2015. It suggested shifting the tax burden to the wellhead: the effect on the state budget of gradual abandonment of the export duty will be more than compensated for by quicker growth in mineral resources extraction tax (MRET). The laws on tax reform have already gone through the parliament and will take effect as of next year. This means nothing good for companies.

All reports for: 2015 , 14 , 13 , 12 , 11 , 10 , 09 , 08 , 07

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