Only 36% of removable oil reserves in Russia turned out to be profitable

Alexey Belogoryev, Deputy Principal Director on Energy Studies at the Institute for Energy and Finance commented to the Davydov.Index internet portal on the Russia's oil reserves profitability.

According to the inventory of the field development economics, carried out on behalf of the Russian government, out of 30 billion tons of recoverable oil reserves in Russia, only 36% is profitable in the current macroeconomic conditions. More details - in the material of Interfax.

“Based on the current macroeconomic parameters, only one third of the reserves are really profitable. There is nothing particularly new here, this value has been known for a long time. The main reason is that a significant part of the reserves put on the state balance sheet, firstly, belongs to hard-to-recover reserves, and secondly, belongs to already developed fields. They require the use of secondary and tertiary methods of oil production, as well as additional investment.

In general, this reflects the objective deterioration of the resource base in the oil industry. But this is also not news, they have been talking about it for many years. The inventory just showed an objective picture of what was happening. What's next? The level of profitability of reserves is constantly changing: it depends on economic conditions, on the ruble exchange rate and the company's capital costs in ruble terms. All over the world, companies are either writing off or building up stocks, so there is nothing to worry about.

On the other hand, the inventory showed that the problem of the deterioration of the resource base is an additional incentive to change the tax system towards the transition to a tax on additional income, to reduce the share of MET in the overall fiscal burden. Actually, the inventory was carried out to substantiate the choice of the path of development of the tax system in the oil industry,” the expert concluded.