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Union of Russia’s Oil and Gas Producers Says Oil Exports in Danger

The president of the Russian Union of Oil and Gas Producers said on Wednesday, March 16, that the country’s oil exports are in danger unless a program of geological exploration of new oil deposits is introduced. Gennady Shmal, quoted by RIA Novosti said that unless the government and public opinion stop thinking about the oil and gas industry as some “magic wand that works and works and works and doesn’t ask to eat”, soon Russia will lose its oil export capacities.

The problem with the oil industry is that existing deposits will either be depleted shortly or are simply not being tapped by oil companies. Gennady Shmal said that on average up to 25 percent of the existing oil wells are standing idle. The figures differ depending on the company. The smallest share (12 percent) of idle wells is at Surgutneftegaz, Russia’s fourth largest oil company. The share of idle wells at Lukoil is 19 percent, at Yukos — 30 percent, at TNK — 38.7 percent. The largest share of idle wells is registered at Roman Abramovich’s Sibneft where 56.5 percent of all wells are unused.

“The only solution is a wide program of geological exploration and tapping of new deposits, including unique ones like Samotlor,” Shmal noted. He said that in the next 15-20 years the most important role will be played by the Western Siberia oil deposits. At the same time the tapping of deposits in East Siberia and the Far East will allow the country to solve problems of strategic security, energy supplies, economic development and even geopolitical tasks, the head of the oil and gas producers’ union noted.

Speaking of the most important tasks facing Russia’s oil and gas complex, Gennady Shmal named the export of oil from Sakhalin deposits in the Far East and the construction of the eastward-bound oil pipeline.

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