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Different approaches towards Russian oil industry: search for strategic development vector

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:

Introduction 3
Chapter 1. Search for new ways of development. Official forecast of the oil industry’s future 4
Chapter 2. Eastern Siberia – region of one project? 14
Chapter 3. Offshore production development 24
Chapter 4. Tight reserves – panacea or another trick? 37
Chapter 5. Russia’s strategy on world oil and gas market 46
Medium-term forecast of developments 52
Date of release: May 30, 2014

If you are interested to obtain please contact » Elena Kim

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

New OPEC+ Deal and Future of Oil Business in Russia
Gazprom on the background of external and internal challenges
Regulation of Oil and Gas Sector in 2019 and Prospects for 2020
Fiscal Policy on Oil and Gas Sector: Revised as Often as Wikipedia
The tax system in the oil and gas sector continues to undergo radical changes. The beginning of 2019 saw the introduction of a new tax regime: additional income tax. That experiment was supposed to start migration of the oil industry to an innovative principle of taxation: on profit, not revenue. It seemed that a new main road was found. In the same year, however, the Finance Ministry launched an overt offensive against AIT. The fear of loss of government revenue now is more powerful than the threat of causing oil production to collapse in the medium term because of a tax system that does not stimulate investment. The Finance Ministry would strongly prefer to speed up the tax manoeuvre completion that earns the state budget additional money. Oil and gas companies respond to this with individual lobbying, attempting to wangle special treatment for their projects.
Ukrainian Gas Hub: Climax at Hand
The “zero hour” comes in less than a month: the contracts for gas transit through Ukraine and for supplying Russian gas to the country terminate at 10 am on 1 January. Meanwhile, Gazprom and Naftogaz are very far from looking for a mutually acceptable solution. The entire European gas business is watching intently the negotiations between Russia and Ukraine. Everyone is waiting for a new “gas war”: the January 2009 events proved to be a serious test both to European consumers and to Gazprom as a supplier. Is there still a chance of agreement? If there is not, will Gazprom cope with its obligations to deliver gas to Europe? Is Russia bluffing as it assures that the new infrastructure and gas in underground storage facilities will enable it to get by without Ukrainian transit even as soon as this winter? What will happen to Ukraine itself at the beginning of 2020?

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

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