Russia will get off the oil needle, but will become dependent on gas

The government has prepared and approved the Energy Strategy of Russia, calculated until 2050. According to the target scenario, oil production in our country will grow slightly in the next quarter of a century - from 516 million to 540 million tons. But natural gas production promises to increase almost twofold, exceeding the astronomical mark of 1.1 trillion cubic meters. But there are also alternative forecasts. With regard to "blue fuel", they are relatively favorable and provide for an increase in production to 900 billion "cubes". With the future of "black gold", things are much worse - oil production risks falling by 3 times - to 170 million tons.

The main goal of the Energy Strategy until 2050 is to find and formulate a response to the challenges facing our country and the entire world community in the fuel and energy sector. According to Russian Energy Minister Sergei Tsivilev, despite the unprecedented sanctions and embargo that the West has imposed on Russia, specialists in the domestic fuel industry have significantly increased their competencies. "We have the technology. We will develop, scale and promote these developments through friendly states," the head of the Ministry of Energy said. Within six months, his department will have to prepare an action plan for implementing the Strategy and submit it to the government for discussion.

From inertia to stress

The document outlines five possible development scenarios, of which two are identified as the most probable - conservative (inertial) and target. The conservative option assumes the preservation of existing trends, legislative regulation and approaches in the fuel and energy complex industries without significant investments in development.

The target scenario, considered a priority option, includes the implementation of development-oriented measures that concern both the provision of energy resources to the domestic market and the realization of export potential. Both programs are similar in one respect - they provide for the growth or maintenance of achieved production indicators.

Since Russia has the largest natural gas reserves in the world - more than 63 trillion cubic meters - and our country accounts for 16% of the world's production of "blue fuel", it is this sector that the Strategy places the greatest hopes on. If the target scenario is realized, gas production by 2050 promises to grow by almost 73% and exceed 1.1 trillion cubic meters. The inertial scenario includes smaller figures - an increase in production to 900 billion "cubes". Liquefied raw materials promise to take the lion's share of the increase in gas production. The authors of the Strategy predict that LNG production in 25 years will reach 175 million tons (more than 240 billion "cubes"), and all this fuel will be exported, the volume of which should increase more than fivefold. According to the document, total gas supplies abroad promise to triple - from 146 billion to 438 billion cubic meters.

Unlike the gas sector, the oil situation does not have overly optimistic prospects. In the target scenario, the production of "black gold" by 2030 will amount to 540 million, and exports - 235 million tons, and in the following twenty years these figures will remain unchanged. In the inertial version of the Strategy, the production of liquid hydrocarbons will decrease from the current 531 million to 523 million tons by 2030, and by 2050 it will fall to 360 million tons. Oil exports, in turn, will fall from 240 million to 73 million tons. By the way, in the stress scenario, which is also included in the Strategy, oil production in Russia will fall to 171 million tons in a quarter of a century. Such volumes will barely be enough to supply the domestic market.

A reserve for the future

According to Igor Rastorguev, leading analyst at AMarkets, there are definitely prerequisites for growth, as envisaged in the more optimistic versions of the Strategy, but they are not related to the current dynamics, but to the possibility of launching large investment projects. "These scenarios assume active development of new fields, development and arrangement of additional transportation routes - both in the LNG and pipeline formats. Therefore, from this point of view, the Ministry of Energy's forecasts do not reflect the current situation, but create a certain reserve for the future, which will be feasible only with a favorable external environment and internal mobilization of resources," the expert notes. The main obstacles to the implementation of such ideas in the short term will be sanctions, problems with the provision of technology and equipment, as well as limited access to external capital. The same reasons may negatively affect the speed of development of new fields and the timing of infrastructure tasks. By 2035, another pressing factor will be added - increased competition in the global market. "Consumption of oil and gas in the world is no longer growing at the same rate as before. Russia will have to compete not only with traditional suppliers, but also with green energy and the developing hydrogen market," warns Rastorguev.

Although the long-term goals outlined in the Energy Strategy seem ambitious, they are nevertheless quite feasible, believes Freedom Finance Global analyst Vladimir Chernov. Firstly, Russia has the world's largest proven gas reserves and an extensive domestic transport infrastructure, which is a solid basis for increasing production. Secondly, there is an active reorientation of exports from the West to Asia - the share of deliveries to China, Turkey, India and the countries of Southeast Asia is growing. In this regard, facilities such as the existing Power of Siberia and the potential Power of Siberia - 2, as well as LNG projects, confirm the shift in export geography towards growing markets, where consumption of "blue fuel" will increase. "If Russia manages to consolidate its position as a key supplier to Asia and ensure technological independence in gas production and LNG production, then the growth of volumes sent abroad looks achievable," the expert is confident.

Exports need flexibility

At the same time, the logistics of expanding supplies to the East will require a significant expansion of route capacity, significant investment and time, and the implementation of large-scale pipeline projects will inevitably be associated with geopolitical and economic obstacles. The lack of personnel, deterioration of infrastructure and risks associated with changes in demand may also act as restraining factors.

Therefore, in the next decade, the implementation of the tasks set out in the forecasts will be possible only with a high degree of flexibility in logistics schemes and export transport routes, an increase in LNG production capacity and the ability of our country to establish effective technological import substitution.

"The currently reflected guidelines of the Energy Strategy are not a strict requirement that must be strictly followed by both industry representatives and government agencies," notes economist and top manager for social communications Andrey Loboda. "The document states that the proposed indicators and parameters for 2037-2050 are evaluative in nature. The Strategy only sets a long-term direction for the work of all involved participants. There is no doubt that by 2050 the Energy Strategy will be repeatedly adjusted, and everyone will probably forget about its initial versions."