More Russian drilling needed
The Russian oil and gas industry is cutting exploration following low prices and the tight credit market. The low level of new drilling could eventually bring the industry into deep crisis, the Russian Union of the Oil and Gas Industry believes.
Head of the union, Yury Shafranik, says the low oil prices could eventually bring the Russian oil and gas industry, as well as the Russian economy as a whole, into a new crisis in the years 2011-2012. He argues that the current Russian reserves are declining and that it will take at least five to seven years to develop new fields. Over the last years, the Russian industry has invested major sums in company acquisitions, but spent only small money on exploration and new field development. Meanwhile, the industry intends to cut exploration in 2009. According to newspaper Gazeta, exploration activities might drop as much as 50 percent in the oil and gas-rich Khanti-Mansiisk Autonomous Okrug. The cuts in exploration will be similarly felt on the Russian Arctic shelf, where the Russians the last years have significantly raised ambitions. Together with the Russian Trade and Industry Chamber, the Union of the Oil and Gas Industry now calls on the federal government to force companies to invest in exploration, Oilru.com reports. In an address to government, the organisations propose a set of measures on how to facilitate new drilling, among them is less red tape, lower taxes and better licence conditions, the website reports.