GlobalData: Russia’s new O&G discoveries drop to 5-year low

Anna Belova, Oil & Gas Analyst at GlobalData, comments:

• To retain its place as one of the top oil and gas producing nations, Russia needs to ensure a steady pace of discoveries to replace produced reserves
• Otherwise, the effects of COVID-19 and reduced investments will be felt by the Russian oil & gas sector well after the pandemic subsides

The past year and half have been challenging for many resource-exporting countries, however, Russia has been able to weather the pandemic-induced demand shock to oil & gas markets with relative success.
Belova continues:

• The country’s operators benefited from a quickly negotiated agreement with OPEC+ members to reduce oil production, which led to price stabilization
• sustained oil price growth as economies recovered
• and the country’s strong rebound in global gas demand, which led to record-high gas prices

However, exploration for new reserves has taken a significant hit, as evidenced by reduced drilling activity and, consequently, the steep decline of new oil & gas discoveries.
Belova adds:

• Over the past decade, Russia has not only grown its oil and gas production to post-Soviet records, it also successfully explored for new oil & gas News-making discoveries were made over the decade in offshore waters and new frontier basins, supplemented by large numbers of smaller discoveries in more mature areas
• However, COVID-19 has caused a steep drop in new exploration and discoveries, when most Russian operators significantly cut capital expenditures into exploration