According to IEA’s latest report, Russia will be among the most affected countries by the lower oil prices scenario in the long run. In particular, “non-OPEC supply will be far more adversely affected by the price reset - none more so than Russia, now projected to swing into contraction of more than 0.5 mb/d by 2020, down from an earlier projection of small growth”.
In an interview to Novaya Gazeta, Mikhail Dmitriev, president of the Business Partnership "New Economic Growth", confirms this trend. He compares the current crisis to 2008-2009 crisis, when the oil prices reached the minimum of $35 and Russian GDP shrank 7% in 2009. With the current oil prices ($50-60), according to Dmitriev, Russian GDP is expected to shrank 3.5-5.5%.
Oil production in the fields with low production costs ($20-25) in Western Siberia is constantly decreasing. Maintaining the same production level will necessarily lead to exploration and development of the new fields in the Eastern Siberia, whose share in the overall production will be at least 20% by 2020. According to Dmitriev, these fields are profitable at $70 per barrel. Moreover this production will need new, expensive pipelines to reach final markets, further undermining the profitability of the oil sector. This is the main reason why Russia will not be able to rely entirely on energy resources exports in 10-15 years from now and it will be forced to diversify its economy.
Eventually, Russia goes for shale oil. “Gazprom-Hantos” completed two pilot wells, drilled in the Bezhenov Horizon deposits. A 3D seismic survey and vertical drilling works are planned for 2016. These oilfields fall into the category of unconventional oil and may herald the beginning of a more extensive exploitation of Russia massive shale oil reserves.