Russia’s new oil and gas discoveries drop to 5-year low

Source: press release, 10 November 2021

New discoveries and exploration drilling in Russia, 2017-2021 (source: GlobalData Oil & Gas Intelligence Center)
New discoveries and exploration drilling in Russia, 2017-2021 (source: GlobalData Oil & Gas Intelligence Center)

Russia has seen the number of new oil and gas discoveries drop to a 5-year low, according to GlobalData. The data and analytics company notes that Russia discovered only six very small fields in H1 2021, which add a mere 36 million barrels – less than 4 days of the country’s daily oil production.

Anna Belova, Oil & Gas Analyst at GlobalData, comments, “To retain its place as one of the top oil and gas producing nations, Russia needs to ensure a steady pace of discoveries to replace produced reserves. Otherwise, the effects of COVID-19 and reduced investments will be felt by the Russian oil and gas sector well after the pandemic subsides.”

The past year and half have been challenging for many resource-exporting countries; however, Russia has been able to weather the pandemic-induced demand shock to oil and gas markets with relative success.

Belova continues, “The country’s operators benefited from a quickly negotiated agreement with OPEC+ members to reduce oil production, which led to price stabilisation; sustained oil price growth as economies recovered; and the country’s strong rebound in global gas demand, which led to record-high gas prices.”

However, exploration for new reserves has taken a significant hit, as evidenced by reduced drilling activity and, consequently, the steep decline of new oil and gas discoveries.

“Over the past decade, Russia has not only grown its oil and gas production to post-Soviet records, it also successfully explored for new oil and gas. News-making discoveries were made over the decade in offshore waters and new frontier basins, supplemented by large numbers of smaller discoveries in more mature areas. However, COVID-19 has caused a steep drop in new exploration and discoveries, when most Russian operators significantly cut capital expenditures into exploration,” Belova adds.