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Three years under sanctions: their influence on Russia’s fuel and energy sector

Three years under sanctions: their influence on Russia’s fuel and energy sector

Time flies. It has been three years since spring 2014 when Crimea came back to Russia, which was practically immediately followed by anti-Russia sanctions. They affected directly the country’s oil and gas industry that is the main sector of the Russian economy. Sanctions have been in force for quite a while, and it is possible to analyze how Russia’s oil and gas sector has adjusted to sanctions, how fatal are losses of the sector, and how sanctions have influenced the resolve of foreign companies to work in Russia. 

The report elaborates on the following issues: 

  • The geography of production of Russian hydrocarbons on the background of restrictions caused by sanctions. Production results – the influence of sanctions on main upstream projects. The situation around greenfields and brownfields amid sanctions. Main oil and gas provinces in Russia in 2014 to 2017.  
  • Oil services in Russia: import substitution or cooperation? The oil services segment was the weakest point of the sector. Therefore, the import substitution program was aimed at this segment. However, in the end, the government acknowledged there was no reason to develop the whole range of domestic technologies. The paradox is that during the sanctions period a big number of JVs with Western partners has been established in the oil services segment. 
  • Major players in Russia’s FES amid financial sanctions. Where do companies get the money for their investment programs? 
  • Adventures of nonresidents in Russia. Foreign companies amid sanctions. Policies of American, European, Chinese, and Indian energy majors. 
  • What is next? Which strategic line will be more popular: staking on relatively soon removal of sanctions and unblocking of Russia-West relations, or relying on the domestic potential, investing in yet unavailable but quite expensive technologies (LNG, offshore, Arctic, and Bazhenov projects)?

Contents of the report:

Introduction 3
Chapter 1. Sanctions, oil and gas production in Russia in 2014-2016 5
Chapter 2. Oil production breakthrough in Eastern Siberia amid sanctions 9
Chapter 3. Western Siberia, Volga Area: Growth with or without Shale? 22
3.1. Yamal: Russia’s New Oil Production Centre 22
3.2. Oil Production in Tyumen Region in Conditions of Sanctions 24
3.3. HTTR Development in Western Siberia, Volga-Urals in Conditions of Sanctions 25
Chapter 4. Cessation of Arctic projects: influence of sanctions or price conjuncture? 37
Chapter 5. Russian Gas Market in Conditions of Sanctions 47
Chapter 6. Financial standing of Russian oil and gas companies amid sanctionsé 57
Chapter 7. Forecast of developments 71
Date of release: June 19, 2017

If you are interested to obtain please contact » Elena Kim

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

Outlook for Russian LNG Industry
Russian Energy and West One Year after Ukraine Conflict Began: Are There Connections Still?
Green Agenda in Russia during Bitter Conflict with West
After February 2022 the agenda was radically rewritten. Western companies began leaving Russia en masse, economic relations with the West were drastically reduced, and the Russian economy began to be pushed violently from the global economic space, hemmed in by sweeping sanctions. All that was, to put it mildly, not the best background for talking about ESG. Especially because tasks of survival and stability under unprecedented pressure became the priority in the economy. In late 2022, however, attempts to reanimate the ESG agenda already became obvious. The message is put across insistently that it is important to Russia regardless of the foreign policy situation. While earlier the “green pivot” was seen as an opportunity to attract Western investors and their technological solutions to Russia, now Keynesian reliance on domestic manufacture is discussed.
Oil and Gas Sector Regulation in 2022 and Prospects for 2023
Gazprom at the Forefront of Economic and Political Battles with Europe
Gazprom is being actively thrown out of the market. Its annual supplies to Europe have shrunk from the previous 150 billion to 65 billion cubic metres of gas. European officials assure that they have already learnt how to live without Russian gas, so they will bring its purchases down to but nominal values in 2023. Their main hope is liquefied natural gas. Today the EU must make a crucial decision: whether it has passed the point of no return in gas business with Russia and whether it is certain that its economy will endure without supplies of Russian pipeline gas. Or, on the contrary, Europe will realise after all that the gas balance will not be achieved and the payment for so headlong a rush for LNG will be disproportionate. Assessment of the potential volume of LNG that will appear on the market before the end of the current decade will be the most important factor for making the decision.

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

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