Russia's oil producers have been drilling at a pace not seen in at least five years as the nation readies for both a loosening of OPEC+ output limits and the possibility of relief from some war sanctions.
Smith noted: “We can safely say that the Russian oilfield service industry has, for the most part, successfully adapted to the sanctions regime.” Despite Western restrictions limiting access to advanced technologies, local companies have sourced alternative equipment or developed substitutes. Dmitry Kasatkin from Kasatkin Consulting stated: “There might be some degree of regress in drilling technologies, like shorter horizontal wells, fewer fracking stages, less precise well bore positioning.”
The industry’s resilience is evident as some foreign providers sold their Russian units to local managers, retaining equipment and expertise, while others, like SLB Plc and Weatherford International Plc, continue limited operations. Sergey Vakulenko, a scholar at the Carnegie Endowment for International Peace, remarked: “In general, the impact of the sanctions and departure of the western service providers is much lower than what was predicted by many three years ago.”
Russia relies on mature fields, primarily from the Soviet era, for 95% of its output, according to Yakov and Partners. Vakulenko explained: “The reserves are not depleted, far from it, but lower-hanging fruits have been picked and now the Russian oil industry has to try harder for the same outcome.” Horizontal drilling, particularly in western Siberia, now accounts for 80% of production drilling, up from 50% in 2020, with projections to reach 95% by 2030, per Kasatkin.
Exploration drilling, however, has declined, averaging 46 kilometers monthly in January-February, down from 68 kilometers the previous year. Kasatkin noted: “Amid growing market uncertainty, volatile and low oil prices, the first thing producers give up is green-field exploration.” High borrowing costs and labor shortages further limit exploration, alongside restricted access to advanced technologies for complex reserves, according to Anna Volkova from Yakov and Partners.
Russia’s central bank, on Friday, revised its crude price outlook to $60 per barrel, citing global demand concerns. Governor Elvira Nabiullina stated: “One of the main risks is greater cooling of the global economy due to trade wars.” Despite exploration challenges, Smith emphasized: “Russia has an abundance of more conventional, if increasingly challenging, reserves, for which available technology is more than sufficient.”
