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: