Grigory Vygon presented a report at the expert group meeting of the OPEC-Russia Energy Dialogue in Vienna

Jun 21, 2017

VYGON Consulting Managing Director Grigory Vygon took part in the expert group meeting of the OPEC-Russia Energy Dialogue, held in Vienna on June 20, 2017. He talked about the current trends in the Russian oil industry and forecasts of its development for the medium term.

Head of the Analytical Center of the Fuel and Energy Complex of the Russian Energy Agency of the Ministry of Energy of the RF Pavel Sorokin, Head of Strategy and Innovation Department of PJSC Gazprom Neft Sergey Vakulenko and representatives of oil companies, renowned international experts and members of OPEC took part in the meeting. The event was held during the 6th Meeting of the Coordinators of the OPEC-Russia Energy Dialogue in Moscow on May 31, 2017 under the co-chairmanship of Minister of Energy of the Russian Federation Alexander Novak and OPEC Secretary General Mohammed Barkindo.

In his speech, Grigory Vygon noted that the extension of the OPEC agreement with other exporting countries could lead to an increase in prices for Brent crude oil to 55 USD/bbl in 2017. Due to this, Russian budget this year will receive an additional income of 850 billion rubles, while EBITDA of oil companies' production segment will increase by 80 billion rubles.

Head of VYGON Consulting also introduced the participants of the meeting to the forecast of the development of liquid hydrocarbon (LHC) production for the period up to 2021. He explained that, on the one hand, Russia finds itself at the stage of launching a significant number of large preferential deposits, the potential production of which may amount to more than 100 million tons of oil. On the other hand, the availability of tax incentives for mature fields and a weak ruble rate contribute to the growth of new drilling on brownfields and, accordingly, the maintenance of their production levels. As a result, by 2021 the potential LHCs production volume can reach about 580 million tons.

In his speech, Grigory Vygon also pointed out that in the longer term, production growth is not possible without switching to a new profit-based taxation system. This will allow to involve economically unprofitable reserves of traditional oil-producing regions of Russia in development. However, according to the Head of VYGON Consulting, the prospect of oil production will depend not only on the tax regime, but also on the development of domestic technologies, including those used in development of hard-to-recover reserves.

Managing Director