MIL OSI Translation. Region: Russian Federation –
The sharp decline in the consumption of fuel and energy complex products, not only in Russia, but throughout the world, was a consequence of the coronavirus year.
The two-fold drop in oil prices early last year hit producers’ incomes, and the lockdown further reduced demand, which fell by about 20 percent. In our country, both of these factors affected almost all segments of the industry, however, despite this, its indicators in 2020 turned out to be higher than experts feared.
The production of oil and gas condensate in the Russian Federation decreased by 8.6 percent and amounted to 512.8 million tons, and the average daily oil production was recorded at the level of 10.27 million barrels. Oil exports decreased by 12.7 percent and amounted to 232.5 million tons. As a result, vertically integrated oil companies (VICs) reduced investments in oil production by 1.9 percent, to 1.3 trillion rubles, the volume of drilling meterage decreased by 1.8 percent and amounted to 27.9 thousand kilometers. Primary oil refining also decreased, amounting to 270 million tons (minus 5.4 percent).
However, the ideal storm that the industry finds itself in did not prevent companies from continuing to build the resource potential of future production. Last year, for example, there was a significant increase – Rosneft discovered three large fields: two on the shelf of the Kara Sea, one more – Zapadno-Irkinskoye – in the north of the Krasnoyarsk Territory: more than 500 million tons of oil and 138 billion cubic meters of dissolved gas were put on the balance sheet … In addition, the technical launch of the Rospan gas project was carried out, which also became a significant asset for the state gas balance. The expert community has no doubts that the entire existing potential of oil and gas production will be in demand.
Today, our country provides 14 percent of world oil and gas production, and in two to three decades, oil and gas production will only grow, industry analysts are sure. However, in the coming years, the impact of negative trends may persist, the Union of Oil and Gas Producers of Russia warns. According to the President of the CISPR Gennady Shmal, both this and next year for the Russian economy and for the oil and gas industry may turn out to be difficult. “It is still difficult to predict how the situation will develop further, it is only clear that non-trivial challenges will lead to non-trivial consequences for the industry. But today it is quite possible to try to make one reasonable forecast – a restart is inevitable. Today, in my opinion, we should concentrate on the tools building anti-crisis systems and strata, “he said.
One of the elements of such a reset according to the plans of the Ministry of Energy will be entering new promising markets, primarily the market for hydrogen production. They consider it a quite achievable task to become one of the world leaders in the production and export of a new type of energy carriers. According to Deputy Energy Minister Pavel Sorokin, this is a market in which Russia has great potential. “Our task is to occupy 20-25 percent of the global hydrogen trade market by 2030. The quantitative volume is still difficult to estimate, it can be from one to two million tons in the low scenario, up to seven million tons by 2035 with active rapid development,” predicts is he.
A number of solutions for maintaining and further increasing production rates are offered in the SNGPR. So, in the case of a reduction in production under the OPEC + deal, which can lead to negative consequences, in particular, to damage to ground equipment, a reduction in human resources, one of the ways to help drillers can be drilling new wells without putting them into operation. This is with regard to tactics. At the strategic level, the CISPR proposes to form a “State program for the reproduction of the raw material base of oil production on the basis of innovative development and the introduction of modern methods of increasing oil recovery.” It will help harmonize the economic interests of the state and subsoil users. And also to create a single state center with the functions of conducting all innovation policy in the oil and gas complex, introducing new technologies, state monitoring of the implementation of scientific and investment programs, evaluating the results of decisions made, laws for correcting strategy and tactics.
“It is necessary to stimulate enterprises to invest in the search and implementation of methods for enhancing oil recovery, in new production technologies, to reduce the stock of idle wells due to low debit rates, to increase the oil recovery factor. tax holidays and tax credits “, – said the head of the CISPR.
Experts believe that the operative measures to support the industry can be assistance to oil companies, primarily small and medium-sized ones – to reduce the severance tax, customs duties; an effective national credit system – with its availability and reasonable interest rates; a change for oil companies to lease idle wells.
It is no secret that today companies with high production costs and a serious credit burden are in the most vulnerable position. Most of the companies have already announced cuts in investment programs due to the financial crisis. For example, LUKOIL stopped drilling in Western Siberia and froze new projects. However, most of the leading Western companies are also cutting investments by almost 40 percent.
Against the background of a drop in export supplies, the demand of the domestic market is becoming an ever greater incentive for the further development of the industry. In the work of the Ministry of Energy, both in 2020 and this year, meeting the needs of the domestic market with motor fuel has become a priority. “In this regard, we always pay special attention to the production of a sufficient volume of oil products, as well as monitoring fuel prices,” said the head of the department Nikolai Shulginov at the final meeting of the Energy Ministry board.
The continuation of the policy of mass gasification of the regions of the Russian Federation, including with the help of low-tonnage LNG, has become an equally significant area. Still, the most optimistic sectoral forecasts are associated with a global economic recovery and an increase in global demand.
Even now, despite the slight fluctuations in prices, a rather favorable situation is developing on the oil market. This is due to several reasons, explained the associate professor of the Department of Industrial Economics of the PRUE. G.V. Plekhanov Oleg Kalenov. “Firstly, an increase in demand. The world economy is gradually beginning to recover from the crisis, production volumes are growing, transport is returning to its usual mode of operation. Secondly, despite the talk about the third wave of coronavirus, the situation inspires some optimism. the fight against infection, as well as active vaccination in the world, “he says.
Good growth prospects await the Russian power industry, where exports have fallen sharply, the expert notes. However, for now, multidirectional trends persist here. The decrease in the physical volume of Russian electricity exports by 42 percent and, accordingly, the drop in income from it by 49.3 percent is directly related to the reduction in electricity consumption in the world. But it was not only Russia that suffered; other major exporters – France, Germany, Canada – also suffered significant damage. The lockdowns introduced in many countries related to the coronavirus pandemic have had a serious impact on energy consumption. The largest decline occurred in the first and second quarters of 2020, which is due to the peak of the first wave of the pandemic and the corresponding restrictive measures. Since the summer, national economies have gradually started to revive, and energy consumption has started to grow accordingly. Now the dynamics of the global recovery in demand remains extremely sluggish due to the repeated deterioration of the epidemic situation. This is undoubtedly reflected in the dynamics of electricity export indicators. “The world will still return to its usual course. For example, the economy of China, first of all, and also of India are already recovering at a significant pace. The total population of these two countries is approaching 3 billion people, which means that the volume of electricity consumption there will grow. The outlook for Russian electricity exports in 2021 will continue to be significantly influenced by the epidemic situation, the dynamics of which is still poorly predictable, as well as the growth of production volumes.It is obvious that the coronavirus will not disappear at once, therefore, in 2021, the global growth rate of electricity consumption will be lower and will amount to about 3 percent, while the expected world GDP growth rate will be at the level of 5.2 percent, “- said the scientist.
In his opinion, the situation is more optimistic in the gas sector. “Gas as an energy carrier is the future. The reason for this, among other things, are environmental factors. Russia is a key player in the global gas market and will obviously retain its leadership in the coming decades. Our country has a quarter of all world reserves of this resource, and This is almost 47 trillion cubic meters. The average growth of production is 2.6 percent per year, while the average value of the increase in exports until 2040 is expected to be 1.4 percent per year. However, new exporters will be added. In addition to the US, Qatar and Australia will be among the leaders. as the largest exporters of LNG in the world. Now the main vector of Russian exports is directed to Europe, but gradually there is a shift of interest towards the countries of the Asia-Pacific region. For example, China already provides about a third of global demand and is the fastest growing market in the world. Russia and China via the Power of Siberia gas pipeline, our country’s prospects here are enormous. of pipeline gas, there are also LNG projects that have been actively developing in Russia in recent years, ”notes Oleg Kalenov.
Thus, the main challenges for increasing the production and export of Russian energy resources remain the growing competition in the world oil and gas market, high volatility in oil prices, the negative impact of sanctions, lack of access to long and relatively inexpensive loans, and, of course, a certain technological lag in some sectors. Our strategic problems have not gone anywhere either: the depletion of old stocks. The answer to them can be the formation of new oil and gas producing provinces, a deeper study and application of world practice in the development of hard-to-recover reserves, shale gas production, as well as the use of new technologies that significantly affect the cost of projects.
A source: Russian newspaper
EDITOR’S NOTE: This article is a translation. Apologies should the grammar and / or sentence structure not be perfect.