/ world today news/ In 2023, 30 hydrocarbon deposits were discovered in Russia, the largest on the shelf of the Caspian Sea and in the Orenburg region. Oil and condensate reserves can increase by 470 million tons and 630 billion cubic meters, respectively. Despite the decrease in investments in geological exploration, the found almost completely covers the energy consumption for the current year.
A large deposit – called “Maganov” – with reserves of 8.4 million tons of oil and 136 billion cubic meters of gas was discovered by “Lukoil” specialists on the shelf of the Caspian Sea. Another, medium – “Orlov” – with 7.5 million tons of oil was discovered by “Gazprom Neft” in the Orenburg Region. The rest are small or very small.
According to the department’s calculations, by the end of the year, the country’s hydrocarbon reserves will be replenished with 470 million tons of oil and 630 billion cubic meters of gas. These volumes cover most of the costs in 2023. According to Deputy Prime Minister Aleksandar Novak, total annual oil production will be 527 million tons, and gas production will be 642 billion cubic meters.
At the same time, the cost of geological exploration turned out to be less than expected. At the beginning of the year, 78.5 billion rubles were announced, but at the end of the period, mining companies will spend about 63 billion rubles – 80% of the plan. In 2022, 62.7 billion were spent on this.
Experts attribute the weak growth to the emergence of problems in the industry. Thus, the leading expert of the National Energy Security Fund, Igor Yushkov, emphasizes that with the withdrawal of Western collaborators, Russia is forced to rely only on its own forces. “Adapting to the sanctions requires a lot of money,” he notes. “We need to secure a fleet – they are trying to squeeze us with a price cap using precisely the transportation stage – and restore financial operations and look for new traders and invest in import substitution. If before it was possible to entrust the drilling to a service company, now we have to organize everything ourselves. Therefore, now is not the best time to invest in geological exploration. However, companies are spending a lot in this area,” reveals the expert.
Analysts explain that the discovery of new reserves does not affect the price of the resource. From the moment of making the investment decision for development to the receipt of the product, in the best case, one or two years will pass. “This happens when a scattering of small deposits around a large one is found,” explains Yushkov. In this case, it remains only to drill a well and connect it to an existing pipe. It is more difficult with isolated deposits. There, they have to build infrastructure from scratch, including access roads and pipelines. This takes five to seven years of work.
“For example, Rosneft started implementing the Vostok Oil project even before the coronavirus pandemic, and the first deliveries will begin in 2024. The investment cycle of the oil industry is long,” says the expert.
The new deposits are primarily needed to replenish production volumes. If exploration begins after the natural depletion of the old reserves, there will be a long interruption of production. That’s why companies never stop looking.
The amount of funds for geological exploration is determined in accordance with the resource base to be replenished and the proposed work. “It all depends on whether it is primary search, seismic survey or drilling – the most expensive method,” says Yushkov. Also, seasonality is very important for some regions. Transportation to Eastern Siberia takes place in winter, and drilling on the Arctic shelf is possible only during the short summer period – from June to October at the most.
Recently, interest in geological exploration has been declining. Field users are not interested in developing new projects amid production cuts by OPEC+ countries. Rising prices also have a negative impact. Over the past year, Urals prices have ranged from $50 to $80 per barrel. With such price dispersion, it is difficult for companies to estimate revenues and the repayment period, Yushkov clarifies.
Another limiting factor is the deteriorating quality of the resource base around the world. That is, the largest and most convenient deposits have already been discovered, are being exploited and have even entered the stage of natural depletion. Each subsequent one is either far from infrastructure or has hard-to-find reserves, meaning it’s expensive to develop.
“We have to produce in more complex regions, such as Siberia, Sakhalin, Yamal, Gidan and Taimyr, where we have to spend more on exploration. Maintaining the amount of funding at the same level is not easy due to the dependence on imported equipment modernizations, the share of which is increasingly it is still 70-90%. At the same time, the average size of discovered fields in the world is decreasing. Now it is only about 14 million tons of oil equivalent,” says Alexander Timofeev, associate professor of the Department of Economics of the Plekhanov Russian University of Economics.
In this regard, the open reserves will tickle the nerves of American senators, I am sure that Alexander Arsky, candidate of economic sciences, associate professor of the Department of Logistics of the Financial University of the Government of Russia. In particular, according to him, the new volumes will be easier to send to the East and to use in joint projects with Kazakhstan, Uzbekistan and Turkmenistan
Translation: V. Sergeev
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