Deputy Minister of energy of Russia Pavel Sorokin said that Russia has not yet reached the limit of production capacity. “Russia has the reserves of about 30 billion tons of oil and resources in more than 12 billion tons. This is enough to keep the bar around the current level of production in the long term. Of course, this will require increasing effort, cost, cost of production and, as a result, create investment incentives to develop more expensive reserves,” — said in a conversation with Forbes Sorokin.
According to the Ministry of energy, the main challenges facing the Russian oil sector — a rise in the production due to the deterioration of reserve quality. However, the future of the Russian oil industry may not be as promising. In an interview with “Vedomosti” the President of “LUKOIL” Vagit Alekperov said that Russia reached a peak level of production and capacity of all mining companies fully loaded.
The current record levels of oil production in Russia are connected with the commissioning of new large fields latinoamer (the Vankorskoye, Talakanskoye, Novoportovskoye field, etc.) open even in the 1970-1980-ies. Oil production in the Khanty-Mansi Autonomous district, which accounts for about 50% of production volumes of “black gold” in the country, fell by more than 40 million tons over the past 10 years, analysts say VYGON Conculting.
“Given the fact that the latter prepared a large Greenfield projects will be introduced in the next 3-4 years, in the long term while maintaining the current system of regulation in the industry is expected to decrease. According to our estimates, while maintaining the status quo of oil production in Russia may decrease by 90-100 million tons by 2035,” said the head of technology, production and exploration of oil VYGON Consulting Darya Kozlova.
But still you should not write off Russia from the accounts, the expert adds. The country has one of the largest resource bases in the world — the only problem is that standing on the state balance amounts do not always take into account the economy development. “Now more than 30% of oil reserves of Russia is economically inefficient, most of them falls in Western Siberia. Therefore, given the current trend of deteriorating resource base, the level of production in the country will be largely determined by fiscal conditions,” sums up Kozlov.
Now the largest producers of oil are Russia and Saudi Arabia, but soon the world leadership can get US. Moreover, according to estimates by the energy information Administration of the U.S. Department of energy, “the United States is probably already ahead of Russia and Saudi Arabia in terms of production and are the world’s largest manufacturer.” According to forecasts of the management, the average production of the USA in 2019 will reach 11.5 million barrels of oil per day.
Over the past 10 years the American oil industry has changed significantly. After 2015, the US Congress abolished the effect of more than 40 years, the ban on crude oil exports, the volume of production has doubled. American oil is now supplied to the markets of Latin America, Europe and China.
Despite the comments by Prince Mohammed bin Salman on the unenviable future of the Russian oil companies, Russia and Saudi Arabia to solve the current problems of the oil market, such as regulation of the balance of supply and demand on the background of reduction of export deliveries from Iran.
After re-introduction of U.S. sanctions against Iran oil exports from the Islamic Republic, according to Bloomberg, dropped from 2.5 million barrels a day in April to nearly 1.5 million in September. When the background of falling exports from Iran, oil prices reached $85 per barrel, President Donald trump has appealed to OPEC’s call to increase production to balance the market and keep prices down.
The Saudi Prince said that the Kingdom and its partners in the cartel has already gone up for market volumes. “Saudi Arabia, OPEC and the countries not included in OPEC supply to the market of 1.5 million barrels a day — said bin Salman. Thus, we export 2 barrel to replace the one lost after the reduction of exports from Iran. We did all we required and more.”
According to Deputy energy Minister of Russia Pavel Sorokin, “in the short term, Russia has the potential to increase production to 200 000-300 000 barrels a day.”
Brent crude is now trading near record highs in 2014. However, the level of oil prices at the moment may not reflect all the possible consequences of sanctions against Iran, warns managing partner PetroRock Energy Eliezer Palacios. “Sanctions come into force on November 5, so those who bought Iranian oil, there is still about a month to find new suppliers. So it is unlikely that we will see $100 per barrel by the end of 2018 — if not implemented unexpected geopolitical scenarios”, — he concluded.