Russia: Which companies will it become unprofitable to produce hydrocarbons?

The statement that "all exporters are lucky" is not true for all Russian companies. If we talk about the oil business, its situation is better described by the "Matthew effect": when the rich get richer and the poor get poorer.

Yevgeny Sigal

During the decade of high oil prices, management of most leading world oil companies used significant part of the surplus not to pay dividends, but to invest in geological exploration and drilling of new fields, mainly difficult to access deposits in the Arctic and on shelf. With the price of oil at the level of $120 per barrel the investments looked justified, but now, when the oil prices fluctuate at the level of $40-50, millions of minority shareholders felt that they had been deceived. Production at expensive fields will become profitable if the oil prices returns to $100 per barrel. There is not much chance that it will happen soon. The shareholders reacted by feet: from July, when the collapse of the oil prices started, the US giant Exxon lost 20% of its capitalization, Chevron - 25%, European Shell and BP - almost 30%. And the fall continues.

From the point of view of finance, the position of the Russian oil companies seems to be more advantageous: double devaluation of the ruble compensated for exporters’ losses from the double fall in the oil prices. They still work in the ruble zone, they pay taxes and wages in rubles, they finance investment projects in rubles.