"Is it time to create a strategic oil reserve in Russia?"

The Internet portal InfoTEK published an author's column by Alexey Gromov, Principal Director on Energy Studies at the Institute for Energy and Finance on the topic "Is it time to create a strategic oil reserve in Russia?".

In the context of growing sanctions restrictions, Russia risks reducing oil exports by 1.5–2 million barrels per day this year (75–100 million tons per year). Of course, efforts will be made to redirect supplies, search for new buyers, but Russia is unlikely to be able to completely redirect such a volume of exports. And this will inevitably lead to a significant reduction in oil production in the country.

What is a reserve for?

We believe it is expedient to return to the idea of ​​creating a strategic oil reserve in the country, which could allow Russia to minimize the losses of the industry from interruptions in supplies to foreign markets.

Technology and Economics

In 2020, the Institute of Energy and Finance, together with the Russian Gas Society, proposed creating a system of underground oil storage facilities in Russia (in the caverns of saline basins in the Central and North Caucasian Federal Districts, as well as in the Kaliningrad and Astrakhan regions) with a total volume of up to 120 million cubic meters, which corresponds to the possibility of storing up to 100 million tons of oil.

The timeframe for the implementation of the first stage of such a project (30 million cubic meters with a storage capacity of up to 25 million tons) is three to five years, with relatively modest construction costs of up to $1 billion.

In 2020, the Russian Ministry of Energy refused to consider this idea, considering that the timing of its implementation does not allow solving the problem of the current moment associated with the demand crisis due to the coronavirus pandemic. But two years later, the situation repeated itself, however, for other reasons, and again we were not ready for it ...

So, maybe now it is the time to make truly strategic decisions that would significantly increase the long-term flexibility of Russian oil production in a rapidly changing external environment?