Analysis: why oil production declines in Russia
Currently, the Russian oil production sector is close to stagnation. Under the forecasts of the Vice Minister of Energy, K. Molodtsov, oil production will be 525.3 million tons in 2014, 525 million tons in 2015-2016, and can slightly increase to 526 million tons in 2017.
The Vice President of Lukoil, L. Fedun is more pessimistic. He claims that the company’s analysts forecast the decline in Russian oil production in 2016 but according to the experience of the colleagues, it will happen earlier. This year they expect zero growth in oil production.
What’s the reason for the stagnation of the Russian oil sector. Is the West the reason for all problems? The first reason coming into the mind is the western sanctions as an answer to the undeclared war of Russia against the Ukraine.
First of all, it stopped the access to the foreign investment and credits for the largest Russian oil companies. Besides from that, some western companies have started to dispose of their Russian assets or to cease their activity in Russia, understanding that the sanctions against the Russian oil production sector are likely to continue. Despite the rousing declarations of the pro-Kremlin mass-media that the USA and the EU sanctions are no danger for Russia, Rosneft already analyzes the point of the possible staff reduction by 25% in its headquarters. The company also prepares to fully transit to Russian equipment for new deposits exploration and development. However Rosneft is going to localize development and production of equipment by 2020, and how is it going to go on before that date?
