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Oil companies – oil production outpaces oil reserves growth

 
28.05.2015

The recoverable oil reserves (ABC1) in Russia have increased 0.55% to 18.3bnt, according to Igor Shpurov, Head of the State Committee for Mineral Reserves, Vedomosti reports. At the same time, the Ministry of Energy has reported reserves (ABC1+C2) growth of 750mnt, the newspaper says. Oil production totalled 526.7mnt. Oil reserves have increased 7.6%, while production has grown 13% over the last decade. The companies face worsening oil reserves quality. The number of oil fields has increased 40% in 2015 compared to 2005, while reserves have increased only 7.6%.

The current legislation stipulates various MET reliefs for oil deposits with a relatively small reserve size, high viscous oil, hard-to-recover oil, oil deposits in certain locations and also based on other factors. Despite that, in some cases the development might be economically unjustified in the current macro environment.

Nevertheless, we see risks to Russian crude production as low in the short to medium term. We forecast oil production in Russia to remain flattish in 2015.

Dmitry Loukashov, Ekaterina Rodina, Alexander Donskoy, Kirill Komarov, Olga Kaiser
VTB Capital analysts

Tags:
oil, Russia

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