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Import Substitution in Oil and Gas Industry: Myths and Reality

Import Substitution in Oil and Gas Industry: Myths and Reality

The import substitution process was started in earnest after the imposition of sanctions in 2014. Six years is a substantial enough period to summarise interim results.

On the one hand, the figures are not that bad: the industry already depends on import by less than 50 per cent. On the other, this is a typical average, while details are all-important.

And an important question is what exactly should be deemed Russian equipment, considering active use of foreign parts and especially software.

Some import substitution examples are a success indeed, but there are also failures that are no less obvious. The latter in fact emphasise the effect of precisely aimed sanctions.

The new, and much more demanding OPEC+ deal has led to large-scale closure of old wells whose operation did not require much imported equipment. At once, however, the question arose about how Russia will withdraw from the deal in the future and whether it will be able to promptly increase production. Only new projects can compensate for the closure of the old wells. Meanwhile, dependence on import is greater there. And here is where lagging behind in offshore technology and hydraulic fracturing can have an effect.

In the gas sector, the key problems are also of an “offshore nature”; this goes for LNG production as well as the construction of offshore gas pipelines.

The completion of Nord Stream 2 by Russia on its own has become the main “hit” and a real detective story – so far without a happy end for Russia though.

From the new report you will learn:

  • What the Russian government deems national products
  • What new sanctions have been imposed on Russian oil and gas in 2020
  • The official results of import substitution by segments
  • Where the situation in terms of import substitution is most problematic
  • Why the greatest success has been achieved in the production of drilling equipment in Russia
  • How Chinese equipment manufacturers have driven out Western ones
  • What chances of import substitution are in hydraulic fracturing
  • Why geophysics is a failure in import substitution
  • What the prospects of development are for the Russian oil and gas industry on the continental shelf and offshore in general
  • Whether there is a Russian technology for large-scale LNG production
  • What problems Russian shipbuilding faces
  • How import substitution is regulated in the Russian oil and gas sector and who the main bureaucratic players are in this area
  • What special investment contracts (SPIC) 1.0 and 2.0 are

Contents of the report:

Introduction 3
1. Drivers behind Import Substitution 5
2. Criteria for Grouping Oil & Gas Sector Products under Imported Category. Official Results of Import Substitution in Russian Oil & Gas Industry 10
3. Import Substitution Success Story: National Drilling Equipment Buoys Upstream Segment 16
4. ‘Pain Points’ of Import Substitution in Russian Oilfield Services Industry Hydraulic Fracturing and Seismic Surveying 25
4.1. Hydraulic Fracturing 25
4.2. Seismic Surveying 32
5. Development Prospects for Russian Oil and Gas Industry Offshore in Context of Import Substitution 35
5.1. Pressure on Offshore Projects 35
5.2. Lack of Drilling Platforms and Subsea Production Systems 38
5.3. LNG Production: in Search of Russian Technology 43
5.4. Problems of Russian Shipbuilding 47
6. Regulation of Import Substitution in Oil and Gas Sector 52
Forecast 62
Appendix 1. Plan of Import Substitution Measures for Mechanical Engineering for the Oil and Gas Industry in the Russian Federation 65
Date of release: December 3, 2020

If you are interested to obtain please contact » Elena Kim

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

The Arctic: Breakthrough Territory or White Hole?
Hydrocarbon Rush to East: Current Status, Medium-term Prospects
Hydrogen as New Energy Hope
Russian Oil Production and Export in Time of Low Prices and OPEC+
State Regulation of Oil and Gas Sector in 2021 and Prospects 2022

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

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