It Is Important for Russia to Maintain Oil Production at the Current Level, the Ministry of Energy Stated
It Is Important for Russia to Maintain Oil Production at the Current Level, Increasing or Decreasing It Is Currently Unprofitable, Said Anton Rubtsov, Director of the Oil and Gas Department of the Ministry of Energy of the Russian Federation.
“We see that in the structure of the oil market the main resource base of oil and gas in terms of potential is concentrated within the OPEC+ group. That is why we set the task of maintaining production,” Rubtsov said at a round table of the Communist Party faction in the State Duma titled “Legislative Regulation and Law Enforcement in the Field of Subsoil Use.”
“It is fundamentally important for us to maintain this balance. If we start producing more, the global price will fall, and we will inefficiently spend the mineral resource base. If we produce less, we will not provide the country with sufficient budget revenues,” he added.
Rubtsov noted that there is currently a global competition for the competitiveness of resource production. The Energy Strategy of the Russian Federation until 2050 is aimed precisely at this. In particular, it sets the task of increasing the recovery rate of oil and gas at existing fields.
“We need to increase efficiency, use maximum resources in those production regions with existing infrastructure, where people live, where there will be the greatest socio-economic effect for our regions. At the same time, we understand that we cannot forget about the Arctic in the long term, and so on, because this is our long-term perspective and strategic advantage,” Rubtsov emphasized.
Nevertheless, one of the problems is the deterioration of the mineral resource base, he noted. Subsoil users are achieving greater reserve additions from complex oil and gas reserves, the development of which is more expensive.
“This means that the rent that will be formed under otherwise equal conditions is decreasing… It is fundamentally important for us to work on economic instruments and subsoil legislation in such a way as to optimally collect this resource rent, in order to maximize revenues from traditional reserves and create opportunities for the development of so-called hard-to-recover reserves,” Rubtsov added.
According to him, if the focus is now placed on the development of domestic technologies, which is already being done, then in the long term Russia will have competitive production with maximum economic rent — not only through taxes, but also through cost reduction.
