Scenarios for Development of Russian Oil and Gas Production in the Mid-Term Amid New Economic and Geopolitical Realities

Economic and geopolitical risks continue to exert a considerable impact on the Russian oil and gas industry. The threat of new Western sanctions being imposed against Russia, the aspiration of European consumers to reduce their dependency on Russian energy resources, and oil price volatility on global markets are only some of the factors that have given rise to uncertainty among market players regarding the outlook for domestic industry operations. Heightened interest in this issue has prompted RPI to undertake a research study devoted to an analysis of the various scenarios underpinning development of the Russian upstream in the mid-term and the possible consequences for the industry if these scenarios materialize. 

This study examines a number of possible scenarios pertaining to the dynamics of hydrocarbon production in Russia until 2020, taking into account the existing and potential risks. Special attention is devoted to relations between Russia and the European Union due to the Ukraine crisis, economic relations between Russia and the Asia-Pacific Region, prospects for building pipelines westward and eastward from Russia, escalation of conflicts in the Middle East, as well as other factors having a direct or indirect influence on the country’s energy market. 

Assessment of the most probable scenarios driving development of the Russian oil and gas industry in this study hinges on the opinions of market players and industry experts, obtained by RPI in the course of interviews. 

The main sections of the report include the following information: 

• Analysis of the current status and outlook for the Russian oil industry and its significance in the global context

• Profiles of Russia’s main upstream players as well as projects completed and slated for implementation 

• Key risk factors facing the O&G industry and their significance

• Most probable scenarios for development of oil and gas production in Russia until 2020 and possible consequences for the market in case these scenarios materialize

Module 1: Demand outlook for Russian hydrocarbons on foreign markets in view of the scenarios under analysis 330 EUR (16 500 RUB)

Module 2: Demand outlook for equipment from E&P companies 330 EUR (16 500 RUB)

Module 3: Demand outlook for oilfield services from E&P companies in Russia. Market breakdown between Russian and foreign players 330 EUR (16 500 RUB)

Module 4: Demand outlook for design and construction in the O&G industry. Market breakdown between Russian and foreign players 330 EUR (16 500 RUB)

Module 5: Opportunities and risks related to project financing in the Russian O&G industry 330 EUR (16 500 RUB)

This report provides a clear picture about options for development of the Russian oil and gas industry and assesses their consequences for the market as a whole and for players in related industry segments, including E&P companies, OFS contractors, engineering and construction companies, materials and equipment suppliers, and financial institutions. 

Each scenario analyzes the scope and dynamics of production, the geographical footprint of production, feedstock demand on foreign markets, forecast need for technology, equipment and financing in upstream projects, the advantages and drawbacks inherent in the various scenarios, risks and the extent of their impact, as well as other relevant criteria for comparative analysis. 

This product could be a valuable tool in the strategic planning process for all players whose activity is related to the Russian oil and gas industry or for companies looking to enter the domestic market. The scenario approach used in the study makes it possible to better assess all the prospects and risks for companies from various segments involved in Russian O&G industry projects and to fine-tune their expansion strategy, if necessary. 

1 Introduction 
2 Current and Future Status of the RF Petroleum Industry
2.1. An overview of the current status of the RF petroleum industry and ongoing projects 
2.1.1. Overall production data for 2010-2013
2.1.2. Production of oil and natural gas by Russian regions in 2010-2013
2.1.3. Market shares of key industry players in 2010-2013
2.2. The most attractive medium-term projects
2.3. Comparison of the Russian and international indicators. The Russian Federation share of the global market.
2.4. Growth prospects and forecasts of oil and gas poroduction in the Russian Federation by 2020
2.4.1. Forecast of hydrocarbon production in Russia in 2014-2020
2.4.2. Comparison of hydrocarbon production plans in Russia and in the world in 2014-2020
3 Key Market Players and Ongoing Projects
3.1. Overview of key RF petroleum industry players 
3.1.1. Producer companies 
3.1.1.1. Russian producer companies 
3.1.1.2. Foreign producer companies 
3.1.2. Service companies 
3.1.2.1. Drilling service market in Russia 
3.1.2.2. Well servicing/workover and sidetracking market 
3.1.2.3. Russian service companies 
3.1.2.4. Foreign service companies 
3.1.3. Equipment suppliers 
3.1.3.1. Drilling rig market 
3.1.3.2. Market for pulling units for well servicing and workover operations 
3.1.3.3. Drill pipe manufacturer market 
3.1.3.4. Russian equipment suppliers 
3.1.3.5. Foreign equipment suppliers 
3.1.4. Engineering and construction companies 
3.1.4.1. Russian engineering and construction companies 
3.1.4.2. Foreign engineering and construction companies 
3.1.5. Investment funds 
3.1.5.1. Russian investment funds 
3.1.5.2. Foreign investment funds 
3.2. Profiles of major ongoing and proposed projects 
3.2.1. Major ongoig and proposed projects 
3.2.2. Profiles of ongoing projects 
3.2.3. Profiles of proposed projects 
4 Factors Affecting the Sector and Its Players 
4.1. Summary of key factors affecting the RF petroleum upstream sector 
4.1.1. Factors affecting oil production.      
4.1.2. Factors affecting gas production. 
4.2. Summary of key factors affecting industry players 
4.3. Significance Matrix and levels of risk affecting the sector in general and its players 
5 Market Players’ Opinion about Potential Industry Growth Scenarios 
5.1. Opinion on industry growth prospects 
5.1.1. Economic and geopolitical factors affecting the sector 
5.1.2. Key sector projects that drive growth 
5.2. Opinion on industry player prospects 
5.2.1. Producer companies 
5.2.2. Service companies 
5.2.3. Equipment suppliers 
5.2.4. Engineering and construction companies 
5.2.5. Investment funds 
6 Overview of Potential Industry Growth Scenarios 
6.1. Introduction 
6.2. Scenario 1 – Optimistic (as per previously announced plans) 
6.3. Scenario 2 – Pessimistic 
6.4. Scenario 3 – Neutral 

Module 1: Outlook for external market demand for Russian hydrocarbons  
Module 2: Outlook for producers’ demand for equipment 
Module 3: Outlook for producers’ demand for oilfield services 
Module 4: Outlook for demand for design and construction services in the petroleum upstream segment
Module 5: Future project finance opportunities and risks in the petroleum upstream sector 

Chart 1.1. Production of oil, condensate and natural gas in Russia in 2010-2013 

Chart 1.2. Exports of natural gas to Europe by ОАО Gazprom in 2013, billions of cubic meters 

Chart 1.3. Shares of the main Russian petroleum provinces in oil production in 2010-2013 

Chart 1.4. Breakdown of natural gas production by Russia’s major petroleum provinces in 2010-2013 

Chart 1.5. Breakdown of oil and condensate production by major companies, millions of tons 

Chart 1.6. Breakdown of natural gas production by gas producers in 2010-2013, billions of cubic meters 

Chart 1.7. Breakdown of natural gas production by oil companies in 2010-2013, billions of cubic meters 

Chart 1.8. Breakdown of oil production by the top five producer countries in 2010-2013, millions of tons 

Chart 1.9. Breakdown of natural gas production by the top five producer countries in 2010-2013, billions of cubic meters 

Chart 1.10. Forecast of oil production in Russia for 2014-2020, millions of tons 

Chart 1.11. Forecast of natural gas production in Russia for 2014-2020, billions of cubic meters 

Chart 1.12. Forecast of oil production by Russia’s major competitors in 2014-2020, millions of tons 

Chart 1.13. Forecast of natural gas production by Russia’s major competitors in 2014-2020, billions of cubic meters 

Chart 1.14. Company shares of the oil production market in 2010-2013, millions of tons 

Chart 1.15. Company shares of the gas production market in 2010-2013, millions of tons 

Chart 1.16. Company shares of the drilling service market in Russia in 2013 

Chart 1.17. Company shares of the Russian well servicing and workover market in 2013 

Chart 1.18. Company shares of the Russian sidetracking market in 2011-2012 

Chart 1.19. Company shares of the Russian drilling rig market in 2013 

Chart 1.20. Company shares of the Russian market for pulling units for well servicing and workover operations in 2013 

Chart 1.21. Company shares of the Russian drill pipe market in 2013 

Chart 1.22. Structure of the Russian engineering and construction market in the oil and gas production segment, 2013 

Chart 1.23. Forecast of oil production in Russia in 2014 – 2020 (Scenario 1) 

Chart 1.24. Forecast of gas production in Russia in 2014 – 2020 (Scenario 1) 

Chart 1.25. Forecast of oil production in Russia in 2014 – 2020 (Scenario 2) 

Chart 1.26. Forecast of gas production in Russia in 2014 – 2020 (Scenario 2) 

Chart 1.27. Forecast of oil production in Russia in 2014 – 2020 (Scenario 3) 

Chart 1.28. Forecast of gas production in Russia in 2014 – 2020 (Scenario 3) 

Module 1: Outlook for external market demand for Russian hydrocarbons   

Chart 7.1.1. Forecast of oil exports by 2020 (Scenario 1) 

Chart 7.1.2.. Forecast of oil exports by 2020 (Scenario 2) 

Chart 7.1.3. Forecast of oil exports by 2020 (Scenario 3) 

Chart 7.1.4. Forecast of gas exports by 2020 (Scenario 1) 

Chart 7.1.5. Forecast of gas exports by 2020 (Scenario 2) 

Chart 7.1.6. Forecast of gas exports by 2020 (Scenario 3) 

Module 2: Outlook for producers’ demand for equipment  

Chart 7.2.1. Demand for drilling rigs, ea. (Scenario 1) 

Chart 7.2.2. Demand for drilling rigs, ea. (Scenario 2) 

Chart 7.2.3. Demand for drilling rigs, ea. (Scenario 3) 

Chart 7.2.4. Demand for drill pipes, millions of tons (Scenario 1) 

Chart 7.2.5. Demand for drill pipes, millions of tons (Scenario 2) 

Chart 7.2.6. Demand for drill pipes, millions of tons (Scenario 3) 

Chart 7.2.7. Demand for pulling units for well servicing and workover operations, ea. (Scenario 1)

Chart 7.2.8. Demand for pulling units for well servicing and workover operations, ea. (Scenario 2)

Chart 7.2.9. Demand for pulling units for well servicing and workover operations, ea. (Scenario 3)

Module 3: Outlook for producers’ demand for oilfield services  

Chart 7.3.1. Forecast of annual production meters drilled in Russia, millions of tons (Scenario 1)

Chart 7.3.2. Forecast of annual production meters drilled in Russia, millions of tons (Scenario 2) 

Chart 7.3.3. Forecast of annual production meters drilled in Russia, millions of tons (Scenario 3) 

Chart 7.3.4. Forecast of the annual number of well servicing and workover jobs in Russia, thousands of jobs (Scenario 1) 

Chart 7.3.5. Forecast of the annual number of well servicing and workover jobs in Russia, thousands of jobs (Scenario 2) 

Chart 7.3.6. Forecast of the annual number of well servicing and workover jobs in Russia, thousands of jobs (Scenario 3) 

Chart 7.3.7. Forecast of the annual number of sidetracking jobs in Russia, thousands of jobs (Scenario 1) 

Chart 7.3.8. Forecast of the annual number of sidetracking jobs in Russia, thousands of jobs (Scenario 2) 

Chart 7.3.9. Forecast of the annual number of sidetracking jobs in Russia, thousands of jobs (Scenario 3) 

Module 4: Outlook for demand for design and construction services in the petroleum upstream segment

Chart 7.4.1. Engineering and construction market size, US$ billion (Scenario 1) 

Chart 7.4.2. Engineering and construction market size, US$ billion (Scenario 2) 

Chart 7.4.3. Engineering and construction market size, US$ billion (Scenario 3) 

Chart 7.4.4. Outlook for demand for design and construction services, US$ billion (Scenario 1) 

Chart 7.4.5. Outlook for demand for design and construction services, US$ billion (Scenario 2) 

Chart 7.4.6. Outlook for demand for design and construction services, US$ billion (Scenario 3) 

Table 1.1. Exploration meters drilled in the Russian Federation in 2009-2013, thousands of meters. 

Table 1.2. Attractive production projects implemented on Russia’s mainland and offshore in the medium term. 

Table 1.3. Major ongoing and proposed projects by 2020 

Table 1.4. Risk impact matrix for existing risks affecting the sector and its players.