Russia must maintain oil production; neither low nor high prices beneficial - Energy Ministry

MOSCOW. Feb 16 (Interfax) - Russia should maintain oil production at current levels, and the country needs to invest in implementing technologies to develop hard-to-recover reserves in order to do this, Anton Rubtsov, director of the Energy Ministry's oil and gas complex department, said during the Legislative Regulation and Law Enforcement in Subsoil Use roundtable discussion.

"Even today the most ardent advocates of the green agenda are beginning to acknowledge that hydrocarbons will remain the foundation of the global energy balance for the foreseeable future, and we are seeing good growth rates. Maintaining a niche here is important," Rubtsov said.

"You know that the OPEC+ group is working effectively. We see that the main resource base for oil and gas is concentrated in the OPEC+ group, in terms of potential, in the structure of the oil market. Therefore, we are setting the goal of maintaining production," Rubtsov said.

"Maintaining this balance is fundamental for us, as with other minerals. If we start producing more, then the global price would fall, and we would be using our mineral resource base inefficiently. If we produce less, we would not provide the country with sufficient budget revenue," he said.

Rubtsov emphasized that "the oil and gas industry faces both physical and economic pressures [from Western countries], because the world is currently struggling for competitiveness." Therefore, Russia's Energy Strategy up to 2050 aims to address the issue, specifically seeking to improve oil and gas recovery rates at existing fields.

"We need to improve efficiency and maximize resource utilization in production regions where infrastructure is in place, where people live, and where the socioeconomic effect for our regions would be greatest. Meantime, we must understand that we must not forget about the Arctic and other areas for the long term, because this is our long-term prospect and strategic advantage," he added.

Meantime, Russia's mineral resource base is deteriorating, Rubtsov said. Even if reserves are replenished, increasingly smaller and more expensive deposits have been discovered in recent years.

"This means that the rent that would be generated, all other things being equal, is declining. Today, we have one of the highest tax burdens [...] It is fundamentally important for us to develop economic instruments and legislation for subsoil use in a way that optimally collects this resource rent, so as to maximize revenues from traditional reserves and enable the development of so-called hard-to-recover reserves," he added.

"Hard-to-recover reserves are a function of costs and technology," and "if we focus now on developing domestic technologies, then Russia should achieve competitive production in the long term not through taxes, but through costs, so that economic rent is maximized," Rubtsov said.