August 26, 2011
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№ 6 (June 2011)

MIOGE 2011 - Developing Oil vs Hydrocarbon Reserves - State-Managed E&P Technologies

Russia's huge hydrocarbon resources often prove difficult for the country to exploit given the lack of innovative development of the nation's economy. Speaking at the Enerkon conference during MIOGE 2011, Russian Oil and Gas Industrialists Union President Gennadiy Shmal called for a more constructive position: "We need to stop talking about the raw materials addiction and the curse of oil or the oil cushion and get on our knees before our forebears who secured this rich inheritance for us".

By Elena Zhuk

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Shmal said that Russia's task was to make good use of its existing possibilities. he said that the future of the oil and gas sector depended not on the current level of production, but on the presence of hydrocarbon reserves and how technologies could be applied in the country and the course the state would take in this regard.

"The oil recovery factor today for developed fields is from 0.29 to 0.3 per cent", Shmal said, "At the same time, increasing the oil recovery factor by even 1 per cent is equal to discovering a field with 1 billion tons of recoverable reserves".

Shaml said that he believes that annual reports from the Russian Natural Resources Ministry citing 750 million tons being added are inflated and "virtual". He said he felt this way because no large fields have been discovered recently. He said that in addition, the value of 1 ton of discovered reserves in the world is on average $6, while in Russia it is only — $2.4-2.6 in West Siberia and $3.7-4.5 in East Siberia.

Shmal said that organisational complications inhibiting the growth of reserves include the presence of a large number of companies working in the sector which are not linked among themselves in any way. In analysing the accomplishments of the Soviet era and the experience of his his colleagues' who "trekked the path of opening West Siberia", Shmal asked a rhetorical question, "Can we achieve such results with our current system of management?" He said he believes that only a state system of management can make the changes necessary in the state sector.
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