Low oil price affects profitability, especially of the fields with hard to extract oil, writes Nezavisimaya Gazeta (Independent Newspaper).
“The oil and gas fields in the Kara Sea and Bazhenova Svita are among such fields in Russia. With the oil price above $100 development of these fields was on the verge of profitability, because the government has introduced some privileges to interest the oil and gas companies,” said analyst of Alpari company Anna Kokoreva.
“With the oil price $70.00-75.00 per barrel the fields on the Arctic shelf and Far North, for instance in Yamal-Nenetzk district, where cost price of production of each barrel exceeds $70.00, will become unprofitable first of all,” said analyst of InstaForex company Anton Fomin.
“Shale oil production and development of deep-water Arctic shelf will become unprofitable first of all. One can say that advisability of development of hydrocarbons on Prirazlomny and Novoport fields in Arctic is in question,” said Artem Deyev, chief of the analytical department of AForex company.
“Meanwhile, even full suspension of the projects will not seriously affect the oil industry in general,” added expert.
He said the federal budget and the reserve funds will have even more problems. Low oil prices could become the reason of social catastrophes in Russia, warns Rustam Tankayev, the lead expert of the Russian Union of Oil & Gas Manufacturers. “In addition to the oil industry, we have almost no other sources of budget revenues left. In Russia the oil industry is overloaded by various state programs and social obligations. It does not mean that it is unprofitable to extract oil in the country. The problem is that one oilman can feed only 900 people in our country. This means that the remaining 100 ones will have to die of starvation or start street protests,” he explained.
The Russian budget for fiscal year 2015 is based on the oil price of $96.00 per barrel.
