Ms. Victoria Gimadi, Head of the Department for Fuel and Energy Sector of the Analytical Center, told to a reporter of RBC how the growth of the oil and gas mining was impacted by the devaluation of ruble and global prices for energy resources in 2015 and this year.
Sanctions have almost no impact on production indicators in the oil and gas industry
Ms. Gimadi noted that following 2015 the factor of the dramatic fall in global oil prices was smoothed by the devaluation of ruble and as a result there was no adverse effect. For example, a new record of 534 mln tons was set in terms of oil production in 2015 (+1.4% versus 2014). The growth of production may be explained by investments of previous periods, thinks the expert.
“The situation in the gas industry looks different. The gas production slightly decreased in Russia in 2015 (-0.9% versus 2014), but this was caused by the demand factor rather than capabilities of mining companies. The domestic market demonstrated a decline in the demand for gas and those losses could not be fully offset by export supplies,” explained the expert.
According to the expert, the sanctions and lower oil prices have had almost no impact on the production indicators in the oil and gas industry so far, but they may have it in the medium or long term, for example through limited geological exploration. For example, according to the Russian Ministry of Nature, major oil companies reduced their investment in geological exploration by 12% in 2015 versus the previous year, noted Ms. Gimadi.
However, the sanctions do not apply to all commenced and planned projects, but relate to the most complicated ones: offshore projects, hard-to-recover reserves, and some others, highlighted the expert. The implementation of these projects will require seeking for alternative suppliers among domestic producers and among producers from countries that do not support the sanctions.
Earlier in June, experts of the Analytical Center published the book “Fuel and Energy Sector of Russia in 2015” stating that crude oil output hit a record high while the output of oil refineries declined, exports were up while natural gas consumption was down, coal output increased to meet rising domestic demand while electricity consumption was down and there was progress in import substitution in the petrochemical sector.