Some 100 million tons of annual oil production — or about 20 percent Russia's total oil output — is at risk because of sanctions related to the supply of Western technology and expertise to Russia, Vagit Alekperov, the head of Russia's No. 2 oil company, said Friday.
Executives at an international business forum in Sochi said in the long run, Russian oil companies can do without the Western technology banned by the latest sanctions imposed on Moscow over the conflict in Ukraine.
But at what cost? they asked. Earlier this month, the United States and European Union imposed sanctions on leading Russian energy companies, including Rosneft and LUKoil, preventing U.S. and EU firms from supporting their exploration or production activities in deep water, Arctic offshore or shale projects.
About a quarter of Russia's oil production currently comes from hard-to-recover reserves with the help of the fracking technology — where powerful, mostly U.S.-made pumps are employed to force oil out of the earth, Alekperov, chief of privately owned LUKoil, said at the International Investment Forum Sochi-2014.
As conventional oil wells begin drying up, the importance of hard-to-reach deposits in Russia — a country that relies for 40 percent of its state budget on oil industry taxes — will only increase. Most of the automated control systems and communications equipment in the oil industry today come from the U.S. and Japan, Alekperov said, adding that these supplies are now at risk because of Western sanctions.
INC News, 21/09/2014
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