23 Sep 2020 18:39

Russia can maintain current oil production until 2040 with macro-economy at level of 2019 - GKZ head

TYUMEN. Sept 23 (Interfax) - Russia is capable of maintaining current oil production until 2040 if the macro-economy is approximately at the level of 2019, head of the State Commission for Mineral Resource Reserves (GKZ) Igor Shpurov said at the Tyumen oil and gas forum.

Shpurov said that these conclusions had been made based on a stock count of oil inventories.

Speaking about the outcomes of the inventory count, he said that it had been carried out in line with two options: the temporary methodological guidelines scenario - the conditions of mid-2019 for the price of oil and expenditures - and the Economic Development Ministry scenario, which is complicated but approximately corresponds to the current state of affairs, with oil at $40 per barrel.

"If we speak about technologically recoverable reserves, according to temporary methodological guidelines, that is, in line with the conditions of last year - we can well maintain oil production on existing reserves until 2040, but according to the Economic Development Ministry, we start seriously falling from 2023, and that's with stabilization of oil production for both scenarios assuming involvement of all profitable reserves in development. That is, both marginal areas and those that are not yet being developed but are profitable. This has to be a sufficiently strong investment program," Shpurov said.

"I'd like to point out that stabilization of oil production until 2040 according to the temporary methodological guidelines scenario - and we all hope that the situation of 2020 is temporary, and for next year everything will recover - can be ensured thanks to implementation of innovative cost-effective technology. Without this, we won't be able to ensure maintenance of the level of production in the long run, and this task is fully solvable. If we analyze the share of new technology in the total production volume, we see that the share of innovative technology in the aggregate volume of oil production of major companies grew from 2009 from 35% to 65% in 2019. That is, essentially, the technology that was at the experimental level in 2009 now provides 65% of oil production in the country. Thus, company's are implementing new technology very actively," he said.

Shpurov said that the outcomes of the inventory count were, for the temporary methodological guidelines scenario, 18.6 billion tonnes of profitable reserves from 28.9 billion tonnes with 35 years of reserves, and for the Economic Development Ministry scenario - 10 billion tonnes of profitable reserves with 19 years of reserves. The volume of non-recoverable reserves or hard-to-recover reserves is 10.3 million tonnes according to temporary methodological guidelines and 18.9 billion tonnes according to the Economic Development Ministry.

"There are very interesting statistics for Western Siberia. Here, inventory count of 337 fields took place, essentially the full picture for the region - fields lower than 5 million tonnes were not included. According to the temporary methodological guidelines scenario, there are technological reserves of 15.8 billion tonnes, 58 years of reserves, for profitable reserves the picture is approximately the same as for Russia as a whole. However, according to the Economic Development Ministry scenario, the situation is twice as bad as for Russia as a whole: 10 years of reserves and just 2.7 billion tonnes of profitable reserves. This speaks about the fact the risks in Western Siberia are significantly greater than for the country as a whole. The risks of reserves going into the unprofitable zone are higher here. Therefore, the tax burden likely shouldn't be so big too," he said.

Commenting on changes to the structure of oil reserves in the last 15 years, Shpurov said that initial reserves in category AB1C1 had grown by 9.2 billion tonnes, and accumulated reserves by 7.2 billion tonnes. "That is, net growth was 2 billion tonnes in 15 years, and what's important is that the discovery of new fields provided 30% of growth. The fields became smaller, yes, but nevertheless, they're there. There were 672 new fields discovered, that is, an addition of 27% to the total number of fields discovered for all time in Russia. Of these 672 fields, more than 60% of reserves are already being developed at present. This is a fairly good result, confirming that geological exploration is working," he said.