Russia’s oil and gas industry is one of the nation’s largest industrial focuses. The country is now one of the top three hydrocarbons producers worldwide and has…READ MORE
Russia's Energy Industry
Oil reserves107.8 billion barrels
Oil production10.93 million bopd
Gas reserves37.4 tcm
Gas production701.7 bcm
Russia: Unconventional Directions
Russia’s oil and gas industry is one of the nation’s largest industrial focuses. The country is now one of the top three hydrocarbons producers worldwide and has the world’s second-largest natural gas reserves. The country is also one of the top five LNG exporters. The oil and gas industry plays a huge part in the country’s economy, traditionally making up around 45% of the federal budget. With its landscape consisting mostly of ageing oil and gasfields, the northern nation is funnelling its efforts to further develop its brownfield assets and raise exploration efforts in its unconventional greenfield options previously not viable due to technological restrictions.
While deposits exist in many areas throughout the country, producing assets are focused mainly in western and eastern Siberia. The Arctic has become increasingly important for hydrocarbons production, particularly gas. Most of Russia’s E&P efforts come from domestic firms. After a long period of mergers, the largest players in the market are Rosneft, Lukoil, Gazprom and Novatek. Following the collapse of the Soviet Union, the nation initially privatised its oil industry, but has since reverted to state control. Russia is a member of OPEC+.
The nation has extensive midstream capabilities for oil and gas, including the world’s longest crude pipeline – the Druzhba pipeline – that carries oil towards the European market. Conventionally around 60% of the country’s oil production was transported to OECD nations in Europe and fed around 20% of Europe’s refinery throughput, though recent conflicts have changed the paradigm. Europe’s reliance on Russian gas had grown over the last decade due to production drops in European countries. Before the war with Ukraine a variety of routes made it possible for Russia to feed European gas consumption without being reliant on transport directly through a single surrounding nation, namely the Nordstream, Blue Stream and Turkstream pipelines. But since the war with Ukraine broke out Russia has had to look to other markets to maintain its exports in the face of economic sanctions.
Russia has made large efforts to diversify its export markets towards Asian nations, including investment in pipelines that pump hydrocarbons directly to China, the latter of which has long remained the largest single buyer of Russian oil.
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