Prof. N.A. Savostyanov, president, Eurasian Geophysical Society and longtime luminary in the Russian geoscience community, offers an analysis of some of the key trends in the development of the Russian market for geophysical services in relation to the oil and gas E&P business. At present, the oil and gas industry forms the basis of the Russian economy. High and ever-growing world prices for oil and gas have been providing huge financial inflows into the both Federal Budget and the government’s so-called Stabilization Fund. The worry is that the current Russian Administration is being short-sighted by stimulating oil production but neglecting the appropriate reserves growth. At the current oil production of 460-480 million topy (tons of oil per year), oil reserves growth is about 220-250 million topy. At present as few as two or three moderate-size new fields are put on stream annually. Reserves growth is mainly achieved via reserves reassessment in the mature areas. E&P activities, including geophysical exploration, are carried out by local oil companies on quite a modest scale. With the cancellation of Mineral Resources Base Reimbursement (MRBR) rates, oil companies considerably reduced their investments in E&P. As a result, according to BP data, Russia’s rank in proved oil reserves dropped down below Saudi Arabia, Iran, Iraq, Kuwait, UAE, and Venezuela. In this situation, Russian geophysical companies have managed to keep their spirits up, for example, by offering their services to local oil producers for such tasks as precise field modelling. In the Russian context, the widespread term ‘geophysical exploration and prospecting’ should be changed to ‘geophysical methods of exploration, prospecting, and field development’. That’s what can be surmized from local geophysical contractors’ operations in the year 2005. In total, the volume of geophysical E&P for oil and gas in Russia last year amounted to 26-28 billion rubles (about $1 billion). As compared to 2004, the number of seismic crews (now over 150) has grown, as well as the number of well logging and perforation crews (now over 2500). This year, the amount of geophysical operations should exceed last year’s figures by 10-12%. This has given rise to a number of geophysical and service company managers complaining about the shortage of skilled engineering personnel and especially field technicians.