The Russian energy industry has made headlines over the past year after the invasion of Ukraine. The Inquirer has published some articles and videos detailing (pun intended) various aspects of the Russian oil industry. And the possible impact of sanctions imposed.
In this article, in the same vein, we will look at Russian oil-producing basins.
There are four central oil-producing regions in Russia:
* Western Siberia.
* Sakhalin, located in Eastern Siberia.
* The Volga-Ural region and the North Caucasus are located in Russia's Central and southern parts.
* Timan-Pechora, in the north of Russia, also has several other potential oil regions, including Eastern Siberia, but these regions have received significant development just now outside Sakhalin.
Let's take a closer look at the characteristics of these four major oil basins and their contribution to Russia's total oil production in 2021, amounting to 10.5 million barrels per day. First, this West Siberian basin is the largest hydrocarbon basin in the world (that is, the largest in the world).for example, oil products and natural gas combined) and, of course, the largest oil-producing region of Russia, which in 2021 will account for more than half, or about 6 million barrels per day, of the total oil production in Russia.
Pipelines connect the basin to central Russia and Europe. * There are several deposits in the West Siberian basin, the development of which began in 1969. Although Russia produces mainly conventional oil, it has vast untapped oil reserves in dense formations; the most important of these is the Bazhenov or Bazhenov shale formation, which covers most of Western Siberia and some areas of the Kara Sea.
According to Wood Mackenzie estimates, in 2013, oil reserves in this shale region amounted to about 2 trillion barrels, while the Russian mining company Rosneft estimated the recoverable resources of the Bazhenov shale at 22 billion barrels. Despite the significant price, encores believe that the development of the Bazhenov shale will not begin soon due to the very high cost and lack of advanced technologies necessary to develop this resource.
The largest group of newly discovered fields in Western Siberia is Vostok oil, with an expected production of 2 million barrels daily. These fields are located in the Russian Arctic region and plan to transport oil using ice tankers. The project plans to drill 6,500 wells and build 5.5 thousand kilometers of pipelines.
The initial estimate of the total cycle cost was $ 35-40 per barrel; however, according to increased estimates, the development cost will be at least $ 150 billion, and based on the current US dollar/ruble exchange rate, makes the development of some of these fields impossible soon. Secondly, this is the Sakhalin Basin - the smallest of the four basins and one of only two offshore projects in Russia.
It consists of 2 oil projects on Sakhalin 1, and there was a joint venture with ExxonMobil, producing about 250,000 barrels per day; on Sakhalin 2, a joint venture with Shell, producing about 400,000 thousand barrels per day. This is about 6% of the total oil production in Russia for 2021. Exxon and Shell have since left Russia, and Russian oil producers are now managing both projects.
The Volga-Ural Basin and the North Caucasus follow this. This region is one of Russia's oldest and most mature producing regions, as evidenced by the steady decline in production. The development of the basin began in 1939. Nevertheless, it accounted for more than 20% of oil production in Russia by 2021, with an output of about 2.3 million barrels per day.
This region has the highest production costs in Russia. Therefore, if oil production in Russia decreases due to sanctions, it is expected that the most significant number of outages will occur in this region. And finally, the Timan-Pechora Basin is the oldest productive area in Russia, exploration of which began in 1929, and development began in 1930.
The development of the first large field began in 1935; the last two lots were developed in 1970. This region is also considered mature and includes heavy oil; hence, it has high production costs. The second largest offshore project in Russia, Prirazlomnaya, is located in this basin, which was opened in 1989, but production began only in 2013.
Its reserves are about 0.6 billion barrels, and its production is about 100,000 barrels daily. Ice-class tankers transport oil from the platform to the mainland for processing and export. No other offshore developments are planned in Russia. Today, a significant part of Russian oil production is produced in mature fields, where many wells are approaching their economic limits or service life - mainly in the Timan-Pechora and Volga-Ural regions.
Suppose Russia loses market share and these old wells and fields are closed. In that case, it will be almost impossible to restart these wells and, of course, unprofitable due to severe technical problems associated with the completion of good construction. Thus, to restore production after the war, they will have to develop new deposits – the problem is that these new deposits will be located in very remote areas for exploration, development, and market launch, which will require significant investments.
