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Russia’s Oil Sector: Wounded but Still Working

Russia’s Oil Sector: Wounded but Still Working

Full Title: Russia's Oil Sector: Wounded but Still Working
Author(s): Sergey Vakulenko
Publisher(s): Energy Innovation Reform Project
Publication Date: July 23, 2023
Full Text: Download Resource
Description (excerpt):

In May 2021, the Russian government adopted the General Scheme for the Development of the Oil Industry to 2035. Although the government has prepared similar strategy documents every five years, the 2021 version was a watershed—unlike previous versions, it acknowledged the coming sunset of the oil era and the eventual decline of Russian oil production. The strategy’s underlying assumptions were that the energy transition and widespread decarbonization efforts would produce a long-term decline in global oil demand following a peak in the 2030s. On this basis,
the document stated that Russia should accelerate work to monetize its hydrocarbons and start to consider “expiry dates” for new oil and gas investments that might become stranded assets. Though the strategy forecasted a much slower decline in oil demand than International Energy Agency and United Nations Framework Convention on Climate Change reports prepared for the COP26 climate summit in Glasgow, the change in the tone was noticeable

Russia’s invasion of Ukraine, and more particularly US and Western sanctions in response to the invasion, have had significant impacts on the Russian oil industry and its prospects. While it is impossible to know how the conflict will evolve, opportunities for a settlement that wholly removes
the sanctions seem limited. Accordingly, this analysis assumes a protracted status quo, meaning no regime change in Russia and enduring confrontation between Russia and the West, akin to longterm Western tensions with Syria, Iran, and North Korea.

All statements and/or propositions in discussion prompts are meant exclusively to stimulate discussion and do not represent the views of, its Partners, Topic Directors or Experts, nor of any individual or organization. Comments by and opinions of Expert participants are their own.

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