Deloitte & Touche Regional Consulting Services Ltd, Moscow, Russia;
"The oil and gas sector is the most important part of the economy in
Russia. Resources extraction is beating records. It is based on boosting
prices and on a flexible tax system. At the same time forecasts show a
production plateau may be reached in a few years. In this case the
government is interested in investments to protect current production
levels. Government regulation is significantly different between oil and
gas industries. The oil industry has a variable tax system to attract
foreign and domestic investments. The gas industry is dominated by
monopoly and is much less open for investments. However, taxes are
rising in the gas industry in order to achieve the same taxation level as
in the oil industry. A few main players with more than 90 %
market share dominate the Russian oil industry. They are mainly state-owned
or have private Russian ownership, but international oil companies can
make a successful joint venture (JV) in Russia. Today privatisation is one
of the government’s priorities, but actual decisions of authorities sometimes contradict to this statement. Resources extraction is beating records. It is based on boosting
prices and on a flexible tax system. At the same time forecasts show a
production plateau may be reached in a few years. In this case the
government is interested in investments to protect current production
levels. They are mainly state-owned
or have private Russian ownership, but international oil companies can
make a successful joint venture (JV) in Russia. Today privatisation is one
of the government’s priorities, but actual decisions of authorities
Government regulation is significantly different between oil and
gas industries.
Oil is produced all over the Russian Federation. The oil fields in the Ural
and Volga Federal Districts account for the majority of oil production
(61 and 21 % in 2010, respectively). Russia has 77.4 billion barrels (bbl)
of proven oil reserves (see Table 1). However, large parts of the country
are underexplored and there may be significant reserves potential in its
share of the Caspian Sea and in the Arctic waters. Lower reserves
increasing rate rather than production increasing rate is the aim for
oil companies in Russia . Top management of 73 % of oil
companies indicated an increase in the volume for geological exploration.
The main reasons are the gradual decline in already discovered
hydrocarbon sources and the necessity to fulfil license obligations.
Relatively high oil prices and support initiatives from the State also provide
incentives for companies to expand exploration activities.
Natural Gas
By the end of 2011 Russia had produced 660 billion cubic meters (bcm)
of gas, which is 3 % higher than the 2010 results. Russia holds the world's
largest natural gas reserves (it is the second largest producer of natural
gas) and the eighth largest crude oil reserves.
Natural gas reserves in
Russia are estimated to be more than 50,000 bcm.
In 2011, oil production of an estimated 10.5 mn b/d accounted for
around 11.5 % of the world’s total. Russia meets 22 % of the world’s
gas demand with supply estimated at 630 bcm. With a total processing
capacity of around 5.4 mn b/d, Russia is the world’s third largest refiner
after the US and China. On 1 January 2010, the Russian Federation State
balance included 895 free gas fields; 619 of them were in a specified
subsurface resources fund, while those not allocated to the fund had low
resources or were located in hard-to-reach regions with severe climatic
conditions. Russian waters in the arctic are expected to contain
100,000,000,000 tons of oil and gas".
"The oil and gas sector is the most important part of the economy in
Russia. Resources extraction is beating records. It is based on boosting
prices and on a flexible tax system. At the same time forecasts show a
production plateau may be reached in a few years. In this case the
government is interested in investments to protect current production
levels. Government regulation is significantly different between oil and
gas industries. The oil industry has a variable tax system to attract
foreign and domestic investments. The gas industry is dominated by
monopoly and is much less open for investments. However, taxes are
rising in the gas industry in order to achieve the same taxation level as
in the oil industry. A few main players with more than 90 %
market share dominate the Russian oil industry. They are mainly state-owned
or have private Russian ownership, but international oil companies can
make a successful joint venture (JV) in Russia. Today privatisation is one
of the government’s priorities, but actual decisions of authorities sometimes contradict to this statement. Resources extraction is beating records. It is based on boosting
prices and on a flexible tax system. At the same time forecasts show a
production plateau may be reached in a few years. In this case the
government is interested in investments to protect current production
levels. They are mainly state-owned
or have private Russian ownership, but international oil companies can
make a successful joint venture (JV) in Russia. Today privatisation is one
of the government’s priorities, but actual decisions of authorities
Government regulation is significantly different between oil and
gas industries.
Oil is produced all over the Russian Federation. The oil fields in the Ural
and Volga Federal Districts account for the majority of oil production
(61 and 21 % in 2010, respectively). Russia has 77.4 billion barrels (bbl)
of proven oil reserves (see Table 1). However, large parts of the country
are underexplored and there may be significant reserves potential in its
share of the Caspian Sea and in the Arctic waters. Lower reserves
increasing rate rather than production increasing rate is the aim for
oil companies in Russia . Top management of 73 % of oil
companies indicated an increase in the volume for geological exploration.
The main reasons are the gradual decline in already discovered
hydrocarbon sources and the necessity to fulfil license obligations.
Relatively high oil prices and support initiatives from the State also provide
incentives for companies to expand exploration activities.
Natural Gas
By the end of 2011 Russia had produced 660 billion cubic meters (bcm)
of gas, which is 3 % higher than the 2010 results. Russia holds the world's
largest natural gas reserves (it is the second largest producer of natural
gas) and the eighth largest crude oil reserves.
Natural gas reserves in
Russia are estimated to be more than 50,000 bcm.
In 2011, oil production of an estimated 10.5 mn b/d accounted for
around 11.5 % of the world’s total. Russia meets 22 % of the world’s
gas demand with supply estimated at 630 bcm. With a total processing
capacity of around 5.4 mn b/d, Russia is the world’s third largest refiner
after the US and China. On 1 January 2010, the Russian Federation State
balance included 895 free gas fields; 619 of them were in a specified
subsurface resources fund, while those not allocated to the fund had low
resources or were located in hard-to-reach regions with severe climatic
conditions. Russian waters in the arctic are expected to contain
100,000,000,000 tons of oil and gas".
