Interfax: Sanctions against Russia already affecting production of tight reserves, could impact shelf

Oil Worker file photo

KHANTY-MANSIISK. Sept 10 (Interfax) – The sanctions imposed by the EU and U.S. against Russia are already affecting the production of tight reserves, Russian Natural Resources Minister Sergei Donskoi said at a briefing in Khanty-Mansiisk.

“The sanctions, first due to technology, have not yet impacted [the country’s economy], but are already affecting the production of tight reserves. As a rule, our oil companies are taking foreign technologies and trying to adapt them to our conditions,” he said.

Donskoi also said that the sanctions could negatively impact production of offshore oil and gas. “Another area that the sanctions might affect is the shelf, because a great deal of foreign technology is used there,” the minister said.

The sanctions will have the least impact on onshore projects that are already being implemented in Russia, “because we have established ties with other countries that are not participating in the sanctions,” Donskoi said.

As an example he cited China, about whose equipment Russian resource companies previously had complaints. But technology in China is improving, making it possible to bring Chinese equipment into Russian projects.

The minister also noted the need to develop Russia’s own industry. “If we will from the very beginning develop Russian technologies, we will ensure security more quickly and will be independent of any external decision,” Donskoi said.

However, he said poor taxation is having a bigger impact on production of oil and gas in Russia than sanctions.

“At present I see that by degree of impact sanctions are affecting production less than the imperfection of taxation,” Donskoi said, adding that the current natural resource extraction tax system makes it possible to profitably produce light oil, but since Russia has large resources and reserves of difficult oil the tax system needs to be structured so as to bring the largest possible amount of reserves into development.

[featured image is file photo]

 

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