Against All Odds: Russia Increases Oil Production Rate

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According to available information rapid growth in oil production is evident in spite of all negative obstacles and other factors which include low oil price and low demand on the oil market in addition to financial and technological sanctions implemented by Western countries. Oil price has become 1.9 times lower ($57) in comparison with its maximum mark in 2014.

At the same time if having a more detailed look at the report it will be clear that such stability does not have any territorial basis. In other words it can be called heterogeneous. For instance, the level of oil production in Western Siberia and the Ural-Volga region has decreased within the first 6 months of 2015. The only way to fill in the gap was provided by level of oil drilling which increased by 11% in addition to development of old oil deposits by means of fracturing technologies. It should also be noted that reduction of crude oil export duty also had positive influence on development of the industry which resulted in reduction of the oil net cost.

If having a closer look on particular oil producing companies, it will be absolutely clear that largest governmental companies faced the most difficulties during the first half of 2015. This is mainly about “Rosneft” and its “Yuganskneftegaz” subsidiary. In spite of powerful governmental support this enterprise has lost 3.4% from its overall production capacity during the first 6 months of 2015. The second half of the current year is also rather unlikely to have positive rates for the company. Nevertheless, the enterprise is planning to increase the level of oil production in 2016-2017 using selection of new oil deposits which include Suzunsky, Naulskoye and Vostochno-Messoyakhskoye fields. In case everything runs smoothly for the company, it will be able to increase its current oil production volume up to20% which is going to be fantastic.

Oil production volume of the largest private company is also decreasing. It seems like LUKOIL production capacity will keep decreasing during the second half of 2015. Nevertheless, the company is also searching for the slightest chance to increase production rate developing some new oil fields. They include Imilorskoe and Pyakyakhinskoye fields, Western Siberia and Yagerskoe field located in Komi. Moreover, LUKOIL is planning to open new offshore oil field located at Northern part of Caspian. If all those plans are implemented in 2016, the level of company’s oil production will be left on the same level with possible slightest growth.

Considering such statistics “Surgutneftegaz” looks rather promising on such background. The company is using all possible methods to increase the level of oil recovery using old fields and oil deposits. Fedorovskoye filed is a perfect example of such stability. It has provided the enterprise with over 600 million tons of oil. The company is planning to continue development of that filed which still looks rather promising considering its hard recoverable deposits. In addition Surgutneftegaz is planning to launch development of another huge field in the nearest 1-2 years as well as several smaller fields which will include Yuzhno-Nyurymskoye, Nenetskoye and Zapadno-Saryutayurskoye fields. Development works of Avtsky cluster of fields is also being held at the moment. Speaking about future perspectives of the company, it can be said for sure that oil production level of Surgiutneftegaz will keep growing in the nearest 2-3 years.

The same thing is with perspectives of other Russian oil producing companies including Gazpromneft, Bashneft and Tatneft. Their oil production rate will also keep growing in the nearest 2-3 years reaching the green zone.

Summing up, it is clear that actually all major Russian oil producing companies are planning not only keeping the current production rate but also increase it in the nearest 2-3 years. If all plans are implemented and meet all expectations, the total growth of oil production in Russia can be from 13.5% to 16.5% in Russia. Considering there can be some problems with financial supports, the author foresees a bit lower growth rate which is about 8.5-13%.

Final Forecast

Russian Federation appears to be extremely active when it comes to fighting for its place on oil producing market as well as Saudi Arabia. At the same time we should not expect stable quotation of oil price in the nearest future considering low demand and the fact that Iran is also planning to enter the market. Speaking about oil price, it would slowly decrease down to $45-50 per barrel