By 2022 Russia can increase its oil production even with low oil prices

20 april 2017

Analytical Center for the Government of the Russian Federation was a program partner of the National Oil and Gas Forum held on April 17-20, 2017, at Expocentre Fairgrounds.

During 3 days of expert discussions, participants addressed the issues of technological equipment of the industry machine-building complex, strategy for scientific and technological development of the industry, measures of state support for the development and implementation of breakthrough technologies, decreasing the foreign equipment imports share and production localization, export potential of high-tech products of the Russian machine-building sector, etc.

At the round table "Analyzing the Main Directions of the General Schemes for the Oil and Gas Industry Development", Alexander Kurdin, expert of the Analytical Center, spoke about the development of efficient and competitive domestic markets in the oil and gas sector.

"The development of the industry depends not only on production volumes and tax policies, but also on the state of competition in the gas markets", - the expert said, recalling that, in 2016, the Analytical Center experts assessed the state of competitive environment in Russia and identified the lack of free competition in the fuel and energy sector.

According to Mr. Kurdin, the fuel and energy sector is one of two sectors with the weakest impact of competition on business and one of three sectors with the heaviest anticompetitive pressure of the dominant participant. "While the Federal Antimonopoly Service has a number of measures aimed at developing competition in the gas and oil markets," the expert said. "What we see is exchange trading with minimum requirements for sales volume, 'trading practices' for oil companies, deregulation of gas prices and provision of access to infrastructure."

"But if the domestic market is well developed, do we actually need any general schemes?" asks Mr. Kurdin. On the one part, competitive mechanisms determine the location of the industry, rather than that of a general scheme. But on the other part, it is difficult to develop competition when there is no reserve for production and infrastructure capacities, and their reproduction is the subject of a general scheme.

Further benchmarks for the domestic market will depend on the attitude towards inter-fuel competition and the high concentration of production, as well as measures to reduce barriers, the expert believes.

The round table participants also noted that Russia is able to substantially increase its oil production by 2022-2023 even with low oil prices. Trends in oil production after 2023 will be determined by the timeliness and effectiveness of tax reform and the investment policy of subsoil users.

This year, the National Oil and Gas Forum welcomed more than 100 speakers, with 17 plenary sessions held within the framework of the event.