Russian Drilling Programs Poised to Best 2012 Highs

By Lada Ponomareva, March 5, 2013

which is evaluated in the sum of $13-16 billion) has actually recovered completely after the crisis decline of 2009–2010. Lately, at the backdrop of continuously increasing investment activity of oil companies, a significant increase of interest to the oil service market has been observed. Thus, while in 2005 the total CAPEX portion in the E&P segment of the major Russian vertically integrated oil companies was $9 billion, in 2011 – approximately $25 billion (including gas companies – $13.5 billion and $40 billion respectively). So currently there is no doubt that in the future (provided the oil prices remain over $90 per barrel) this process will become irreversible.

We expect that positive tendencies at the drilling market will continue: to maintain stable production volumes stipulated by the long-term development strategy (under the conditions of well production rates declining below the level of 10 tons per day), the specific volume of development drilling will keep growing (in the last seven years this parameter increased by approximately 50 percent). However, the answer to the question which oil-servicing companies will manage to use these opportunities remains open, as the market is extremely competitive. Among the major projects, we would mention not only new regions (Eastern Siberia, continental shelf areas), but also West Siberia, which will remain the main raw materials base of the RF; and the rate of decline of the regional production from the levels of 2005–2006 exceeds 15 percent.