Russian Drilling Programs Poised to Best 2012 Highs

By Lada Ponomareva, March 5, 2013

wells and sidetracking operations (see the results of SGK-Bureniye  and Tatneft) in Russia. Gazprom Neft and Rosneft, for example, also kicked off a more detailed study of the development of hard-to-recover reserves from the Bazhenov and Achimov reservoirs. And the results of this study could help these companies, as well as the entire Russian oil and gas sector, reach a new level of field development. Oil and gas fields in Eastern Siberia and the Far East are also being developed quite actively, the reserves of which will provide the resource base for the second stage of the East Siberia-Pacific Ocean (ESPO) pipeline that was commissioned by Transneft in December 2012.

Industry analysts note that Russia's oil and gas sector was positively affected by high global prices for oil, which despite rather strong fluctuations in 2012, stabilized at approximately $105-110 per barrel. In 2013, experts forecast the price of Brent to remain between $105-115 per barrel. However, as in 2012, analysts predict that potential price drawdown in spring in summer this year will not lead to a significant decrease in average global oil prices. At the recent "Oil and Gas Market: Milestone Events in the Country and Worldwide" online conference organized by the Finam.ru information agency (a member of the investment group FINAM), Vitaliy Kryukov commented that: "The market has calmed down and volatility has dropped. This is happening against a backdrop of increasing oil production growth in the U.S., which has already reached over 7 million barrels per day this year; declining U.S. oil imports; oil production growth in Iraq, etc. A great number of factors can be listed to prove that there is no oil shortage on the world market, but all of these factors are neutralized by global money supply growth and artificial market regulation in Saudi Arabia. Under these circumstances, oil market volatility has virtually disappeared and stock markets now speculate mostly on the spread between Brent and WTI; there are not many high stakes and, as a result, no one is currently interested in the issue right now."
These market conditions give oil-service companies an opportunity to bring something to the table. Oil service companies have completely recovered from the crisis and the market for oilfield services, according to Ernst&Young, is extremely competitive at the moment.

What Are The Leaders Up To?
For a complete understanding of the overall industry picture, we should discuss the performance of major oil companies and their prospects for 2013.
Rosneft's 100-percent purchase of TNK-BP is considered the most significant event in the oil and gas sector in 2012. After completing the deal, Rosneft will officially become the largest public oil and gas company in the world with an increase in proven reserves of more than 60 percent (from 23.4 to 38.3 million barrels per day of oil equivalent), and an increased in liquid hydrocarbon production of more than 76 percent (from 2.6 to 4.6 mboe, which exceeds half of the daily production of the entire U.S.). Rosneft is also developing