Gazprom Neft: More Than Half of New Oil Production in the Russian Federation Will Come from Hard-to-Recover Reserves
By the year 2030, more than half of crude oil production in the Russian Federation will come from hard-to-recover reserves, which means that large-scale development of these resources will require adjustments to the tax regime and state support for technological innovation, according to Alexander Dyukov, Chief Executive Officer of Gazprom Neft.
He noted that the Energy Strategy of the Russian Federation through the year 2050 places significant emphasis on the development of hard-to-recover reserves (HRR). In his opinion, this focus is entirely justified.
“By 2030, more than half of new oil production in Russia will come from hard-to-recover reserves. At Gazprom Neft, more than 60 percent of our current production already comes from such reserves. We know how to work efficiently with many types of HRR,” Dyukov stated.
“However, to continue the broad integration of these resources into full-scale development, a coherent government policy is required. We need fine-tuning of the tax regime to stimulate the development of hard-to-recover reserves.”
The Chief Executive Officer of Gazprom Neft also emphasized that oil reserves are becoming increasingly complex, and this will drive greater demand for new technologies within the oil industry.
“That is why government support for technological development is critical—to encourage oil and related companies to engage in research and development (R&D), pilot-scale industrial testing, and the replication of new technologies,” Dyukov stated.
He also drew attention to the interest among Russian oil companies in expanding the application of the excess profit tax regime (known in Russian as NDD – tax on additional income).
Dyukov stated that this tax regime has proven effective, enabling the launch of numerous new projects and enhancing production efficiency at mature fields.
In his view, the state also has a vital role as a coordinator of industry-wide demand for equipment, chemicals, and materials, which would help achieve economies of scale and reduce the cost of key components necessary for the development of such HRR resources.
“It is worth noting,” Dyukov concluded, “that by stimulating the development of hard-to-recover reserves, the government also enhances the efficiency of conventional oil production, as the new technological solutions will also be actively applied to traditional reserves.”
