Surprise, Surprise: Russia Plans Its Own Shale Oil Revolution By Next Decade
Russia wants a boom in unconventional oil output by the start of the next decade, and is prepared to look east for technology if its ambitions are hindered by Western sanctions over the Ukraine crisis, Russian oil executives said.
Russia is now pumping near its capacity of around 10.5 million barrels of oil per day (bpd), with the bulk of production coming from depleted western Siberian deposits, highlighting an urgent need to look for new oil resources.
Some Western companies are refraining from new investment in Russia because of political tensions, potentially threatening Moscow’s goal of keeping oil production at least stable in the coming years.
Moscow has over the last couple of years started to look more closely at unconventional oil prospects in a move to replicate the oil boom in the United States.
Last year the authorities introduced tax breaks to encourage investments into unconventional oil, including the Bazhenov formation in western Siberia, hoping the measures would boost the share of unconventional oil to 11 percent of the Russian total by 2020 from 0.2 percent now.
“Russia might not be in the middle of delivering a new shale revolution but for sure is at the start of it,” Andrei Kuzyaev, Lukoil vice president, told an annual economic forum in St Petersburg, shunned by many global CEOs because of East-West tensions over Ukraine.
“Traditional reserves are depleting, there are some forecasts that production will decline… This all creates a stimulus for our country.”
The U.S. Energy Information Administration estimates Russian recoverable shale oil resources at 75 billion barrels, more than the 58 billion barrels held by the United States, now the leader in shale oil production.
The ‘revolution’ Kuzyaev refers to could be hampered by Western sanctions on Moscow, limited for now but already preventing some companies from new investments in Russia – which needs advanced technology to explore for unconventional oil.
The Financial Times reported this month that the United States and the European Union could ban exports of modern technology and applications for use in the Russian oil sector, which would affect future oil production.