Page 18 - RusRPTJun21

including exploration in remote areas. We have the goal of loading the Northern Sea Route, hydrocarbons will become its basis.”
Most of Russia’s oil production is concentrated, and has been since Soviet times, in west Siberia, but east Siberia, that has a very similar geography and is believe to hold significant unexploited reserves, remains under developed.
More recently Russia has also begun to explore and exploit the Arctic regions that is also thought to hold even more reserves and is becoming increasingly accessible thanks to the ice melt due to global warming.
Russia is also developing the so-called Northern Route, a shipping channel across the top of Russia that significantly shortens the transport links between Europe with Asia and is building a fleet of nuclear powered icebreakers to traverse it.
However there are still restrictions on accessing this oil and gas. While the pipeline infrastructure in western Siberia is well developed that in Eastern Europe and the Arctic still needs to be built. Exploiting the fields has also been made more difficult by US sanctions on advanced oil extraction technology exports to Russia where equivalent technology does not exist.
And the global warming that is making more fields accessible is also threatening the existing pipeline network as Russia’s permafrost is melting that could see the existing pipelines sink into a quagmire if the year round rock hard ground turns into mud.
“It will be difficult to maintain production costs of hard-to-recover oil,” Kozlov said. “The price of the end product exerts pressure on the industry, while the foreign partners do not allow the Russian oil industry to use some technologies. Still, the government helps the companies by taking on some costs, including the cost of geological exploration, so that the companies spend more on production.”
Kozlov’s estimates are an upgrade from previous estimates that put the reserves of oil at closer to 57 years, according to Kozlov’s predecessor Sergey Donskoy in a 2017 estimate. The expanded gas estimates are based on exploration of the Arctic region, which contains 72% of the country’s natural gas deposits and 25% of its oil.
Kozlov conceded that more geological surveys are needed to firm up the estimates, particularly in more remote areas.
2.5 Ruble to weaken over the summer, but end the year stronger
The recently run up of tensions between Russia and the west have made the ruble very volatile as the link between Russia’s national currency and things like the oil price or economic performance were almost entirely replaced by geopolitical tension.
18 RUSSIA Country Report June 2021 www.intellinews.com