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12 Jan, 2024 06:56

Russia’s oil industry resilient to Western sanctions – Bloomberg

Production drilling still managed to reach the highest level in a decade last year, data shows  
Russia’s oil industry resilient to Western sanctions – Bloomberg

Russian oil companies were on track for record drilling at their oil fields last year and showed no signs of harm from sanctions or the departure of some Western oil-field service providers, Bloomberg reported on Wednesday.   

From January to November last year, Russia drilled a total depth of 28,100km, the highest in over a decade, the outlet wrote, citing industry records. Analysts from energy intelligence firm Kpler and Moscow-based consultancy Yakov & Partners expect that for the entire 2023 Russia’s production drilling will have exceeded 30,000 km.   

“Russia is substantially more independent in its oil-field services than generally appreciated,” said Ronald Smith, an oil and gas analyst at Moscow-based BCS Global Markets.   

The drilling spree comes alongside a recovery in both volume and the value of Russia’s oil exports, the outlet noted, adding that the surge occurred despite sweeping sanctions imposed on the country’s energy sector and the departure of international oil-service providers.   

The EU imposed “comprehensive exports restriction on equipment, technology and services for the energy industry in Russia” in 2022, while the US sanctioned numerous companies that produce drilling equipment and develop production technology in a bid “to limit Russia’s future extractive capabilities.”  

Although two major global oil-service providers, Halliburton and Baker Hughes, sold their Russian businesses and left the country, other key Western giants such as SLB and Weatherford International have continued operating in Russia.   

The exodus of Western firms has had a minimal impact on Russia’s oil industry as their local subsidies “were mostly sold to management, retaining the know-how built up over the years,” according to Viktor Katona, lead crude analyst at Kpler.  

“Only some 15% of the nation’s domestic drilling market depends on technologies from so-called unfriendly nations,” said Daria Melnik, vice-president for exploration and production at Oslo-based research firm Rystad Energy.  

Industry data shows that units belonging to domestic energy majors such as Rosneft, Gazprom, and Surgutneftegas make up the bulk of the Russian oil-service market. Russian companies have also developed in-house expertise in upstream operations, proving that Western restrictive measures have largely failed.

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