Russia could reduce its oil and gas production by 20% by 2030 if it does not replace Western technology. The most vulnerable are offshore production and the development of hard-to-recover reserves. This forecast was made by Yakov and Partners (ex-McKinsey & Co in Russia) in the report “Prospects for the development of the oil services industry in Russia until 2030”, which was studied by RTVI. The sanctions did not prevent Russian oil companies from setting a multi-year drilling record in 2022, having completed 28,000 km of wells. But the “Achilles heel” of Russian oil and gas is the consolidation of advanced technologies from the West.
“If the situation does not change radically, by 2030 Russia could lose up to 20% of the current level of production,” says Andrey Streltsov, partner of the company.
Although the presence of foreigners in the Russian oil services market has been declining since 2014, they accounted for 20%. In 2022, almost all companies from “unfriendly” countries, including the “big four” – Schlumberger (8% of oil services in Russia), Baker Hughes (4%), Halliburton (2%), Weatherford (1.5 %) have suspended their activities in Russia. Some of them have decided to sell Russian assets to local management, which continues to work, but without access to global developments.
“Companies have announced that they are suspending investment in Russia, suspending new projects, but existing projects and contracts are still being implemented,” said Governor of the Tyumen region Alexander Moor.
Some equipment is still purchased from Western companies, some equipment is not provided at all, notes Yakov and Partners. “The rest can be enough for 2-3 years,” analysts predict.
Firms from “unfriendly” Western countries provided the most sophisticated technology. Their need will increase as traditional reserves are depleted and the share of hard-to-recover oil (with unfavorable geological conditions, super-viscous oil) increases, analysts have warned.
For a number of critical dependency solutions, examples are given in the report. Well trajectory control equipment is 100% represented by companies from “unfriendly” countries. In the offshore production segment, the share of imports among floating drilling rigs is 90%, support vessels and equipment for offshore production – 80%, offshore seismic exploration – 70%. 52% of the hydraulic fracturing (HF) technology market is occupied by companies from “unfriendly” countries, and the share of domestic equipment is less than 1%.
The Russian oil services market has seen steady growth from 2014 to 2021, the report notes. In 2015, despite a double drop in oil prices, it rose by 6% to $17 billion, while the volume of the global oil services market fell by 28% in the same year. In 2016, the global market fell another third, while the Russian market, contrary to the general trend, grew by 6%. At the end of 2022, the Russian oil services market is estimated at around $20 billion.
