- Most of Russia's oil production continues to originate in West Siberia, notably from the Priobskoye Oil Field and Samotlor Oil Field. The Sakhalin group of fields in the Far East only contributes about 3% of Russia's total production, although it has yet to fulfill the expectation that it would contribute significantly to Russia's total oil production. In the longer term, however, Sakhalin, along with the untapped oil reserves in Eastern Siberia and the Russian Arctic, may play a larger role. Several international oil companies are actively working in this area. The Russian sector of the Caspian Sea and the undeveloped areas of Timan-Pechora in northern Russia also may hold large hydrocarbon reserves.
- A number of new projects are in development, but these new projects may only offset declining output from aging fields and not result in significant output growth in the near term. The use of more advanced technologies and the application of improved recovery techniques are resulting in increased oil output from existing oil deposits. Fields in the Western Siberian Basin produce the majority of Russia's oil, with developments at Rosneft's Samotlor and Priobskoye fields extracting more than 1 million bbl/d combined. Production in the region is dominated by Russian firms, although foreign companies, notably Shell, have secured access to production in Western Siberia.
- The potential oil reserves of Eastern Siberia, the Russian Arctic, the northern Caspian Sea, and Sakhalin Island are attracting attention. A number of international oil companies have secured acreage and are investing heavily in exploration and development on hydrocarbon-rich Sakhalin Island, although the Russian government is pushing for a greater role for domestic companies in these projects. Gazprom acquired control of the Sakhalin-2 project from Shell, and it is seeking control of the marketing of gas supplies from the Sakhalin I project, led by Exxon Neftegas Limited, a subsidiary of ExxonMobil.
- Russian companies are also expanding into the Arctic and Eastern Siberian regions, spurred on by tax holidays and lower oil export tariffs. While several new fields have come on line since 2009, bringing additional fields into production will take time and may require a reformed oil tax regime from the government.
Russia's oil production by region, 2012
Region Thousand bbl/d
- Western Siberia 6,422
- Urals-Volga 2,312
- Krasnoyarsk 368
- Sakhalin 283
- Komi Republic 259
- Arkhangelsk 249
- Irkutsk 201
- Yakutiya 133
- North Caucasus 64
- Kaliningrad 26
- Total 10,317
Russia's oil and gas producing regions
- West Siberia is Russia's main oil producing region, accounting for around 6.4 million bbl/d of liquids production, nearly two-thirds of Russia's total production. While this region is mature, West Siberian production potential is still significant but will depend on improving production economics at fields that are more complex and that contain a significant portion of remaining reserves.
- The two largest oil fields in West Siberia are North Priobskoye and Samotlor, which account for about 20% of West Siberian production. Urengoy Gas Field is the largest gas field in the region. Other large oil fields in the region include Mamontovskoye Oil Field and Salymskoye Oil Field.
- In addition to well-established oil fields, a number of wet gas developments in Western Siberia are under way. It is likely that gas condensate volumes from these fields will grow within the next few years as a result of these developments.
- Urals-Volga was the largest producing region of the Soviet Union until the late 1970s, when it was surpassed by Western Siberia. Today, this region is a distant-second producing region, accounting for about 22% of Russia's total output. The giant Romashkinskoye Oil Field (discovered in 1948) is the largest in the region. It is operated by Tatneft. While the field reached its peak production level sometime in the late 1970s, it likely will continue to produce until at least 2030, according to Wood Mackenzie.
- Urals-Volga is home to a number of other fields, although their average size is relatively small at about 140 million barrels of recoverable liquids, according to Wood Mackenzie. A significant portion of the oil produced in this region is heavy.
- With the traditional oil-producing regions in decline, East Siberian fields will be central to continued oil production expansion efforts in Russia. The region's potential was increased with the inauguration of the Eastern Siberia Pacific Ocean Oil Pipeline (ESPO), which created an outlet for East Siberian oil. A total of 400,000 bbl/d of crude oil was supplied to the pipeline in its first year of operation.
- The region's development was spurred by tax breaks and the removal of export duties, but most of these concessions were lifted in 2011. East Siberia has become the center of production growth for Rosneft, the state oil giant. The start-up of the Vankor Oil Field in August 2009 has dramatically increased production in the region and has been a significant contributor to Russia's increase in oil production since 2010. Vankor, located north of the Arctic circle, was the largest oil discovery in Russia in nearly three decades. In 2013, the field has produced about 430,000 bbl/d.
- There are a number of other fields in the region, including the Verkhnechonskoe Oil and Gas Condensate Field, Yurubcheno-Tokhomskoye Oil and Gas Condensate Field, and Agaleevkoye Gas and Condensate Field.
Yamal Peninsula/Arctic Circle
- This region is located in the Yamal-Nenets Autonomous region and it straddles Western Siberia. This region is mostly known for gas production. Crude oil development is relatively new for the region. In the near term, the region is facing transportation infrastructure constraints, although the construction of the Purpe – Samotlor Pipeline Project ameliorated some of these constraints. Transneft also is constructing the Zapolyarye Purpe Oil Pipeline, that will connect the Zapolyarye Gas and Condensate Field to the Purpe-Samotlor pipeline. The pipeline will come online in three phases, the first of which is expected to be completed by the end of 2014.
- In addition to the Zapolyarye gas and condensate field, the area is home to Vostochno Oil Field, Messoyakha Oil And Gas Fields and Zapadno Messoyakha, Suzun, Tagul, and Yuzhno Russkoye Gas Field, all of which will benefit from the additional transportation availability.
- On the Yamal Peninsula itself, gas fields such as Yuzhno Tambey, Severno Tambey, and Khararsavey dominate the landscape, as well as the Vostochno Bovanenkov and Neitin gas and condensate fields.
- North Caucasus is a mature region that consists of a number of small fields. LUKoil has been actively developing some of the deposits situated in the North Caspian, such as the Yurii Korchagin, launched in 2010. Other discoveries in the area include the Khvalynksoye, Rakushechnoye, Sarmatskoye, and Zapadno Rakushechnoye fields. The development of the region is highly sensitive to taxes and export duties, and any change or cancellation of tax breaks may negatively affect the region's development.
Timan-Pechora and Barents Sea
- Timan-Pechora and the Barents Sea are situated in north-western Russia. Much like those in the North Caucasus, liquids fields in these areas are relatively small. However, producers in these areas can take advantage of the developed infrastructure and can maximize their export potential via the Arctic Sea ports including the Varandey port.
- Exploration and production in Timan-Pechora has been somewhat disappointing. For example, LUKoil's development of the Khylchuikoye project appears to have reached its peak production capacity as early as June 2010.
- Gazprom is planning to develop the 530-million barrel Prirazlomnoye Oil Field in the Pechora Sea after the company was granted tax breaks in July 2012. Without the tax breaks, the project would have been uneconomical. Much like Prirazlomnoye, fields in these areas are challenging and expensive to develop, particularly under the current tax and tariff system.
- The Barents offshore production likely will have very little effect on liquids production, as the region is home to gas fields that contain little to no liquids in the reservoirs. Gazprom is planning to develop the Shtokman Gas Field in the Barents Sea, but the project has been repeatedly delayed because of its costs and a lack of tax incentives, which are necessary to make it economical.
- Located off Russia's eastern shore, Sakhalin Island is home to a number of large oil and gas fields. The areas of the island are being developed in phases, with Sakhalin I and II producing oil and gas. Continued growth is expected to come from the Odoptu and Arkutun-Dagi fields in Sakhalin Island. Odoptu started producing in 2010, and Arkutun-Dagi is expected to commence production in the first half of 2014. Other sizeable fields include Chaivo (Sakhalin I), Piltun-Astokhskoye, and Lunksoye (Sakhalin II), and Kirinskoye and Veninskoye (Sakhalin III).
- Russian exploration companies and international consortia are involved in the development of the Sakhalin Island resources. Even though all of the consortia have extensive export plans via liquefied natural gas (LNG) terminals and export pipelines to the mainland, there has been little progress beyond the first two developments on the island: Sakhalin I and Sakhalin II. There also is an oil export terminal on the island.
Russia's oil grades
- Russia has six main oil grades, including Russia's main export grade, Urals blend. Urals blend accounts for more than 80% of Russia's exports and is a mixture of mostly Russian crude varieties. This blend includes a wide spectrum of qualities, but it also includes some Azerbaijani and Kazakh crudes. As a result of the differing components that make up the Urals blend, there is a significant variation in its properties at each export point. On average, Urals' gravity is 31.3°API and about 1.25% sulfur content, although gravity can vary between 31° and 33° API with sulfur content ranging between 0.8% and 1.8%.
- The Eastern Siberia-Pacific Ocean (ESPO) blend came on stream in late 2009 and is a mix of crudes produced in several Siberian fields. The grade is exported through the recently constructed ESPO Pipeline to China as well as through Russia's Pacific coast to other Asian countries. ESPO blend is a fairly sweet, medium-light blend, with a gravity of 35°API and 0.5% sulfur content.
- Siberian Light (35.1°API, 0.57% sulfur) is usually blended into Urals and Kazakhstan's CPC Blend, but it is also exported as a separate stream. The Siberian Light volumes are mainly shipped out of the Tuapse terminal on the Black Sea, although according to Energy Intelligence, some of these volumes have also been transported to the Iranian port Neka via the Caspian Sea.
- Sokol grade is mainly produced from the Chaivo field that is offshore of Sakhalin Island, but volumes from the Odoptu are also part of the stream. As additional fields come on line, such as the Arkutun-Dagi field, further volumes will be added to the blend. Sokol is a light, sweet crude with an API gravity of 36.7° and 0.24% sulfur content. Sokol is prized by Asian refiners for its high middle distillate yield, making it competitive with the Dubai and Oman grades.
- Vityaz blend is a light (41°API), sweet (0.18% sulfur content), paraffin-rich crude, characterized by its high middle distillate yield. This stream is Russia's first offshore crude stream, produced under the Sakhalin II production sharing agreement (PSA). The Vityaz crude is loaded at the Prigorodnoye port, located on the Aniva Bay at the southern tip of Sakhalin Island.
- The Yuzhno Khylchuyu (YK) blend is composed of crude oil produced at the eponymous fields in northern TimanPechora. The YK blend, also known as Arctic Light, is loaded at the Varendey terminal on the Barents Sea and its gravity is 33.7°API with 0.76% sulfur content.
- The bulk of the country's natural gas reserves under development and production are in the upper Western Siberia. However, Gazprom is increasingly investing in new regions, such as the Yamal Peninsula, Eastern Siberia, and Sakhalin Island, to bring gas deposits in these areas into production. Some of the most prolific fields in Siberia include Yamburg Gas and Condensate Field, Urengoy, and Medvezh'ye, all of which are licensed to Gazprom. These three fields have seen output declines in recent years. A substantial amount of natural gas is also associated with oil deposits in the country's oil heartland in Western Siberia.
- In 2012, Russia was the world's second-largest dry natural gas producer (23.8 Tcf), second only to the United States (24.1 Tcf).
- Independent gas producers such as Novatek have been increasing their production rates, with non-Gazprom sources expected to increase further in the future. Higher production rates have resulted from a growing number of companies entering the sector, including oil companies looking to develop their gas reserves.
- Russian government efforts to decrease the widespread practice of gas flaring and to enforce gas utilization requirements for oil extraction may result in additional increases in production.
- In Russia, natural gas associated with oil production is often flared. According to the U.S. National Oceanic and Atmospheric Administration, Russia flared an estimated 1,320 Bcf of natural gas in 2011, the most of any country. At this level, Russia alone accounted for about 27% of the total volume of gas flared globally in 2011. Although a number of Russian government initiatives and policies have set reduction targets for gas flared, thus far, decreases in gas flared have not occurred.