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Tuesday, March 07, 2006

OPR UPDATE: RUSSIAN PRODUCTION IN DIRE STRAITS?

An interesting article appeared on Kommersant yesterday. Apparently Russia’s Natural Resources Ministry has submitted a draft strategy on development of oil and gas reserves under the Russian continental shelf. The area under consideration is primarly north of the Russian mainland in the Barents and Kara Seas.

The plan claims that, given a sufficient boost to investment, the region will yield 250,000 barrels per day of oil by 2010 and 2 million barrels per day by 2020. The shelf, it says, holds over 100 billion barrels of oil and 73 trillion cubic meters of gas.

However, the article goes on to make an interesting claim about the future of Russian production.

[The Natural Resources Ministry] calculated that Russia will practically exhaust reserves of profitable fields on land as early as by 2015. 75 percent of discovered oil and gas deposits are under development and 50 percent of their reserves are already worked out, the ministry claims. Geologists stress that major discoveries are to be expected on the shelf rather than on land.

This paints a stark picture of Russian conventional oil production. While the report might wish to paint a dire picture in order to scare the Russian government into action –the Ministry is seeking €1 billion to kick-start development- the prognosis would have to be near enough to reality to convince the government to allocate funds. Although the largest Russian companies publish reserve estimates, the aggregate number is, alas, a guarded secret known only to the state.

1 Comments:

At 3:36 PM, Blogger David Amulet said...

This is a stark picture, indeed. It's too bad we have no good way to assess it.

-- david

 

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