Hard-to-recover oil reserves in Russia grew by a third in 9 years

Explored hard-to-recover reserves (TRIZs) of hydrocarbons in Russia have increased by 30% over the past 9 years, the annual increase is an average of 3%. This was announced on April 21 by the head of the oil, gas, groundwater and facilities department of Rosnedr Nina Erofeeva during a meeting of the board of the department. Her words were reported by TASS.

According to the latest available data from the Ministry of Natural Resources, as of January 1, 2021, oil reserves in Russia in categories A + B1 + C1 amounted to 19 billion tons. In 2022, the country produced a total of 535 million tons of oil, and the increase in reserves amounted to at least 600 million tons, said Minister of Natural Resources and Ecology Alexander Kozlov. In 2021, the production of tight oil in Russia increased by 3.75% compared to 2020 and amounted to 166 million tons, a representative of the Ministry of Natural Resources told Vedomosti. “Annual production [ТРИЗов] also increased, the annual increase in production is on average 16%,” said Erofeeva.

According to her, the importance of TRIZs is growing as readily available hydrocarbons are exhausted. Erofeeva noted that the authorities are taking measures to stimulate investment in the development of hard-to-recover reserves. Including, she adds, amendments to the law “On Subsoil” were adopted, according to which subsoil can be provided to companies for use for the development of technologies, geological study, exploration and production of hard-to-recover reserves.

Erofeeva said that companies have received 10 licenses to develop such technologies. In 2022, two projects for the development of TRIZs were agreed at the Yuzhno-Neprikovskoye field in the Samara region (developed by a subsidiary of Rosneft) and at Palyanovskaya area in Khanty-Mansi Autonomous Okrug (“Gazprom Neft“).

Vedomosti sent inquiries to these companies and to the Ministry of Energy.

According to the law, it is possible to create technological polygons on the Abalak, Achimov, Bazhenov, Domanik and Khadum suites (combinations of reservoirs) and reserves of extra-viscous oil. “Rosneft” And “Gazprom oil” received two licenses for the creation of such landfills, “Tatneft– one, and Stavropolneftegaz – five.

The departments are discussing options for partial reimbursement of costs to oil companies that have received licenses for technological test sites at the TRIZ sites, Interfax wrote. The Ministry of Natural Resources and Rosnedra have prepared a draft unified classification of TRIZs. It will take effect when the form of an agreement between the state and companies on state support measures is prepared, provided that companies fulfill their obligations to develop new technologies and scale them up, a representative of the Ministry of Natural Resources explained to the agency.

At the beginning of 2023, 53% of recoverable oil reserves were classified as potentially exempt, according to Rosnedra data. 58% of these reserves are hard-to-recover, which are characterized by difficult geological conditions, and another 42% are remote reserves located in harsh climatic conditions. Rosnedra is working on defining common approaches to the classification of TRIZs and a financial and economic model to assess the profitability of their development, Erofeeva added.

The growth in the share of hard-to-recover oil reserves means that work on import substitution of the equipment necessary for this is becoming even more important, explains Sergey Kaufman, an analyst at FG Finam. In this regard, he calls the creation of his own hydraulic fracturing fleet (HF) a priority. In some cases, the increase in the share of TRIZ indicates the need for additional benefits or work in the additional income tax (ATT) regime, he adds, since such mining leads to a decrease in profitability under the usual taxation regime.

The AIT regime has been in effect in the Russian oil industry since 2019. It should encourage companies to extract oil from depleted fields or invest in the development of new ones. An additional income tax is paid at a rate of 50% on the income from the sale of raw materials minus the costs of mining and logistics, while the MET is simultaneously reduced to an average of 40%. The deposits that are included in the AIT perimeter are divided into five groups.

At the same time, Kaufman notes, TRIZs are extremely different, and in Russia there are enough reserves that companies can independently develop and send to the domestic market and for export. For example, TRIZs may include reserves located in difficult climatic conditions, for example, the reserves of the Rosneft-Vostok oil project.