Russian oil industry under sanctions: analysis of long-term implications and adaptation strategies

Abstract

Since 2014 Russian oil industry has been under sanctions. Nevertheless, oil production increased from 518 (2012) to 548 million tons in 2016. This increase in production was due to development of major greenfield projects, initiated way before 2014. Our calculations show that by 2025 the new fields will pass peak production and the issue of maintaining production will become increasingly acute. The key to ensuring stable oil output is the development and implementation of new, advanced technologies, which became the target of the sanctions. Government and oil companies need to formulate comprehensive strategies and provide focused joint efforts to overcome import dependency. A combination of building up domestic production and expertise and establishing connections with new foreign suppliers is advisable. Political differences should not prevent cooperation with Western companies as it benefits all parties.