Russian new oil and gas discoveries drop to five-year low

Russia has seen the number of new oil and gas discoveries drop to a five-year low, according to the latest analysis from GlobalData. The country discovered only six very small fields in 1H2021, adding just 36mn barrels – less than four days of the Russia’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 has 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.

As Belova notes: ‘Russia’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.

Belova adds: ‘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.’