Despite a range of negative conditions, the Russian oil industry increased its oil production all the way up to another record in 2016. Still, a lot of experts assume that this tendency is likely to reverse in the near future. If that’s the case, the oil production volume in Russia will start dropping.
All in all, Russia produced 540 million barrels of crude oil in 2016. This was 11,2 million barrels of crude oil a day, or a new production record for Russia. Even relatively low oil prices didn’t prevent the local oil companies from producing that much oil. In the meantime, many experts predict that the Russian oil production is doomed to start shrinking in the coming months.
Yet, the experts’ predictions now seem to be starting to get real as they are confirmed by the stats coming from the corresponding Russian agencies. Any production and export cuts may become cause problems for the Russian economy. You see, for many years, oil export has been the bread and butter of the Russian economy, and that’s why the Russian government got used to it. Some high-ranking Russian politicians are still feeding the public with an excessive amount of anti-crisis optimism taken out of thin air.
On March 27, the Russian Minister of Natural Resources said that he was surprised with all those spookies you can find online and offline about the doomsday scenarios for the Russian oil industry. According to him, the government is still financing in the exploration and production of fossil fuels while innovating the related industries. He is sure that even in 30 years, Russia’s oil and natural gas fields will be plenty of resources to extract and export.
However, making long-term production forecasts is not something reliable. To prove it, let’s remember the recent U.S. shale boom. Up until the mid 2000s, many experts predicted the end of the oil era in the USA. But then the shale oil was discovered and they learned how to extract it, which made the experts revise their forecasts.
As for the current tendencies in the Russian oil industry, they are not that optimistic. Mining companies often overestimate the discovered oil fields. However, even the experts from Rosnedr calculated that it’s impossible to sustain the same level of oil production after 2020.
Officially, Russia is one of the leading countries in terms of oil reserves. At this point, Russia is said to have over 15 billion tons of crude oil. This means that Russia still can produce crude oil at the same level for the next 30 years. The thing is that more and more oil fields contain crude oil that’s hard to extract. At the current prices, extracting such oil is not a profitable business at best. At this point, most oil fields are at the stage of declining production.
Only new oil fields are seeing an increase in oil production. Even though some of the biggest Russian oil companies are still increasing their production, the overall tendency is already starting to show and over the next couple of years it is expected to become clearer.
