The Present and Future of Russian Oil: CEO Challenges
Thursday, February 2nd, 10:45-12:00
The times of “easy oil” are coming to an end and Russian oil companies are facing multiple challenges from declining production and high-cost maintenance in the established extraction centers to reserve replacement and investments in new frontiers. In response to these challenges the Russian oil companies are moving into Eastern Siberia and to off-shore shelves in the Caspian Sea, Black Sea, Sakhalin, and the Arctic and also developing new oil fields abroad, which will require enormous investments in infrastructure, new technologies, know-how and global practices, practical experience, capital and qualified personnel.
Investment decisions that are being made today will shape individual companies and the oil industry in the next 10-15 years. In order to undertake such long term commitments the industry needs a stable and predictable political, economic and tax environment, allowing value accretion to both the state and the shareholders.
In a non-diversified economy with the high dependence on oil and gas revenues, the state will keep on claiming the ever-growing slice of the oil pie. However, the realities of the sustainable oil industry development require changes: in the legislation that provides a wider access to the resources, including off-shore; in the taxation that migrates from revenue-based taxes to a profit-based tax system; in economic and financial incentives that stimulate innovation, new technologies and leading world practices; in environmental standards.
What are the responses of the industry leaders to these challenges?