Russia will run out of oil and gas reserves by 2028-2030. German Gref, Sberbank Chief, made such a statement during Pozner TV Show.
“We can see that the era of oil and gas is ending, whether we want it or not. Now, we are speaking about when we will run out of this mono-product. I think it will be approximately in 2028-2032, taking into account all the tendencies we can see now,” he said adding that it is his personal opinion. “It is necessary to get prepared for it,” he said. Gref believes that it will be painful for the economy to refuse from that mono-resource state, but the authorities are well aware of the situation.
The Sberbank chief believes that from viewpoint of macroeconomics, it is high time to diversify economy. Otherwise, he says, Russia will face three classical ways: revolutionary shocks, civil war, or high dependence on other countries. German Gref’s words partially confirm the data of the Russian Ministry of Natural Resources. Minister Sergey Donskoy said that, for instance, the recoverable reserves of oil would be enough to Russia for 28 years.
Meantime, experts do not share the panic-driven views of German Gref who as they say highlighted the key points improperly.
“Sberbank chief mashed everything together. He said there are insufficient reserves, prices will not hike, and it is necessary to refuse from oil and gas. Taking every point separately, we can see a certainly different situation,” says Igor Yushkov, leading analyst at the National Energy Security Foundation. “First, German Gref refers to data of western specialists who calculate only the reserves the recovery of which is profitable on the current prices of hydrocarbons. For instance, BP says Russia’s reserves will be enough for 22 years if the oil price is $50. If the price grows to $100, the reserves will be enough for a much longer period. Second, no one can forecast the oil prices. No one can rule out that the prices may hike.”
The third formula is to shift to alternative sources of energy, according to German Gref. “However, many forgot why it has emerged. It happened due to high prices of traditional energy resources. The situation in Europe is getting worse, as it is running out of oil and gas reserves. Russia has no such problem. Speaking of the future of hydrocarbons, we mean their usage in a different capacity. For instance, earlier oil was used mainly as kerosene for lamps. Now it is engine fuel. At the next stage, it will be used mainly in oil chemistry to produce polymers etc.,” Yushkov says.
Therefore, Yushkov said, it is not shame to recover oil and gas in the era of technologies. “U.S. increases recovery and occupies the first place in the world by gas and the third by oil recovery. Hydrocarbons are a driving force of economy. Russia needs the same. The oil and gas riches of the country must be considered as a competitive advantage, not curse,” the expert says.
If Russia’s recoverable reserves are enough for 28 years, as the Ministry of Natural Resources says, the probable reserves will be enough for 57 years. The greatest part of these reserves are hard to recover.
“The main problem now is their development,” says the leading analyst at the National Energy Security Foundation. “The policy of anti-Russian sanctions showed that they can oust us from the market of oil and gas service in a wink. Therefore, it is necessary to develop own technologies and build our strategy with a careful eye to autonomy. Surgutneftegaz is a brilliant example of this, as the company has not been affected by the sanctions unlike other Russian companies.”
No one, in fact, knows how much oil and gas reserves there are in Russia and when we will run out of these reserves. The current prices of hydrocarbons make the exploration of reserves unprofitable and companies often increase reserves simply reassessing the reserves of already developed fields on paper.
“Generally speaking, since the collapse of the Soviet Union, no one in Russia has engaged in geological exploration activity seriously,” Igor Yushkov says. “At present, we are in a situation when the country has actually no big field for sale. The companies in turn do not risk investing in exploration of new fields considering the current prices of hydrocarbons. The situation will change, if the government takes the initiative, or at least, stimulates exploration of fields by tax privileges. There is no other way so far.”
