Will Russia lose its status as an oil exporter?

RUSSIANS vs SAUDIS: CORONAVIRUS and the new OIL WAR – VisualPolitik EN

According to analysts' forecasts, production prospects &# 171; black gold in the country is not enviable

MOSCOW – According to the recent forecast of the Ministry of Economic Development of the Russian Federation, Russian oil exports may increase in 2019 to 256.7 million tons.

Whether the predictions of state officials will come true or not, the question is open, but in any case, this is an assessment of the near future. With distant horizons, it's even more difficult. This applies equally to both export and extraction of "black gold".

Thus, according to the global forecast of the International Energy Agency (IEA), oil production in Russia is expected to drop by 24% by 2040 (from the level of 2016, when the IEA's conclusion was prepared). And the US Energy Information Agency predicted an increase in Russian oil production for the same period, but by only 3%.

In such a context, there is no need to pin particularly happy hopes on exports. And these are far from the worst forecasts. According to some of them, in the foreseeable future, Russia will have enough oil produced only for its own needs, and it will have to refuse export altogether..

At the expense of what then the budget will be filled, it is impossible to imagine, because the profit from the sale of oil on foreign markets is one of the main income items of the Russian Federation.

Oil and gas analyst Mikhail Krutikhin said in an interview with the Voice of America that, according to a recent statement by Rosgeologia executives, Russia will lose about 40 percent of its oil production by 2035 due to natural reasons – due to deterioration in the quality of reserves. In his opinion, production will start to decline anyway..

“According to some forecasts, this will happen this year, according to others – in 2021,” he added. – There are objective reasons for that. Good, cheap oil is running out in Russia, and hard-to-extract oil is very expensive. If everything continues to follow the path that has now been outlined, by about 2040 the country may completely stop exporting and limit itself to using its oil for domestic needs. ".

Today Russia needs about 6 million barrels of oil per day for its needs.

There are different forecasts, including more pessimistic ones, Mikhail Krutikhin noted: tax breaks need to be kicked out of the government. And pro-government analysts, on the contrary, downplay the danger ".

At the same time, structural problems hinder the development of the oil industry even more than sanctions, the analyst said: “When giant companies like Rosneft are responsible for oil production in a country, a paradoxical situation arises. Rosneft is skimming the cream, and the remaining fields are so small, scattered over a large area and lacking infrastructure that only small companies that are ready to take the risk of technological innovation and financial risk can deal with them. And such companies are simply cornered and do not have the opportunity to work ".

The Russian leadership has no long-term plans at all in terms of prospects in the oil industry, Mikhail Krutikhin is sure. In his opinion, the task of those in power is to impose as high taxes on companies as possible and collect as much money as possible right now, without worrying about the future..

“It is characteristic that the government has been unable to adopt the next version of the documents called the energy strategy of Russia for four years already. What else can we talk about here? The leaders of the entire economy are simply temporary workers. Their goal is to fill their pockets now, and then at least the grass will not grow, "the analyst summed up.

Will Russia lose its status as an oil exporter?

In turn, Sergei Zhavoronkov, a senior researcher at the Gaidar Institute, admitted in a commentary to the Voice of America that he does not believe in forecasts too much. According to him, 2035 is too far away, and during this time a lot of things can change..

“In Russia, the continental shelf has not yet been practically developed and the same shale oil has not been produced,” he stressed. – It is clear that this is happening for many reasons. The main one is that the largest state-owned companies, for competitive reasons, are not interested in new oil being produced. But if the political regime in the country changes, then we will be able to extract oil where there is a lot of it ”.

Russia has a huge territory, and this advantage must be skillfully used, the economist believes.

“Of course, (in the oil industry) a lot also depends on advanced technologies, which are not currently due to sanctions, and they are not expected in the foreseeable future. But this is again a political question, "concluded Sergei Zhavoronkov..

He expressed the firm hope that in a certain number of years, "when Putin is not in power," all the existing restrictions on the supply of technologies to Russia will be lifted..

Will Russia lose its status as an oil exporter?