P.Sorokin said, as quoted by TASS:
- Almost 100% of our production will be hard to recover over the term of 10 years
- The hard-to-recover reserves will have much higher lifting costs than conventional reserves
Russia needs to incentivize exploration in order to replace the hard-to-recover reserves with new, potentially lower-cost, discoveries.
In the 1st half this year, Russian companies found oil and gas at 6 very small fields, adding just 36 million barrels to reserves, which is equivalent to fewer than 4 days of Russian daily oil production, according to GlobalData’s estimates.
Anna Belova, Oil & Gas Analyst at GlobalData, said:
- While Russian oil production and revenues have benefited this year from the much higher oil prices due to the OPEC+ cuts and rebounding global demand, exploration has continued to suffer from the COVID-inflicted crisis in 2020, which forced companies to slash capex for exploration drilling
- To retain its place as one of the top oil & 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