With oil prices at a record high, Russia’s oil giants have to keep on investing to find new fields – and get every last drop out of existing ones. RT traveled to the far northern Komi republic to talk to one man whose job is to make sure Russia
Sergei Dryablov, chief engineer at a subsidiary of Russia’s largest oil producer Rosneft, has been in the business for 16 years. The industry’s problems have long become his own. The main thing for us is exploration. Its what the bulk of our money is spent on. If we had new field, new reserves, we could provide the country with adequate levels of oil and gas output. Severnaya Neft, or Northern Oil, is located in Timano-Pechyorskaya region – one of Russia’s richest in oil reserves. It’s on the list of hard-to-explore areas which means local companies can seek tax breaks. Russia’s annual oil production has grown from 300 million tons in 1999 to almost 500 million tons last year. But as oil fields dry up and robust demand drives global oil prices to record levels, local producers count on tax breaks to make their investments into new projects viable. With many fields decades old, Russia’s oil output is declining. Dryablov’s job is to apply the latest technology to extract the remaining oil efficiently, while exploring for new fields. And as for Rosneft itself, it needs tax breaks to repay its debts as Uralsib strategist, Chris Weafer, explains. This company’s carrying a great deal of debt, which they took on board of course when they bought the assets from the receivership of Yukos. And at the same time of course they need to deliver profits to the shareholders, the people who subscribed to the equity when Rosneft listed in the IPO in London two years ago. Shareholder profits aside, Dryablov hopes reduced taxes will allow Severnaya Neft to boost crude production by several percentage points over the next few years.