Bloomberg explains why the Russian oil industry has stood up to sanctions
Drilling of new wells in Russia increased to a 10-year high
Last year, Russian oil companies drilled wells to a total depth of over 28 thousand kilometers, the highest in more than a decade.
Source. Bloomberg
The number of wells in Russia increased by 7%, exceeding 7.8 thousand. Almost all key Russian companies have improved their results, the agency notes.
Despite the sanctions and the withdrawal of foreign oil companies from Russia, Russia "has managed to retain most of its oilfield service competencies, assets and technologies," experts say.
Bloomberg cites three reasons why the oil industry in Russia has withstood the sanctions.
First, foreign suppliers accounted for only 15% of the total volume of the country's oilfield services segment. The bulk of this market is occupied by Rosneft's, Surgutneftegaz's and Gazprom's own units. Russian companies engage foreign contractors if they need high-tech services and equipment, as well as modern software, but such things are not needed to maintain fields that are already operating, the expert explains.
Secondly, some of the largest Western oilfield service providers have not left the country. SLB and Weatherford continue to operate in the country. The former said that its "unique corporate structure" allows it to be flexible and operate in Russia without violating sanctions. The latter has suspended investments in new projects in Russia, but continues to provide services to Russian oil companies.
Thirdly, two oilfield service giants that have left Russia – Halliburton and Baker Hughes – have sold their businesses to local players. This allowed the units to retain their staff and competencies.
Experts expect that in the long term, sanctions will still affect Russian oil companies: a chronic shortage of technologies for the development of offshore and other hard-to-reach fields will be affected. But in the next 4-5 years, Russian oil companies will be able to maintain production at the same level.
Background. Earlier, Mikhail Podolyak, an advisor to the Presidential Office, said that only 9% of Western companies have stopped doing business in Russia.
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