London (Platts)--12Oct2012/750 am EDT/1150 GMT

The International Energy Agency does not expect Russia to replicate the success of North America in the development of unconventional oil and gas resources, a senior agency official said Friday.

Antoine Halff, the head of the IEA's oil markets division, also said during a webinar on its Medium-Term Oil Market Report for 2012 that more exploration would be needed in Russia in the future to develop the nascent industry.

"The resources are there in Russia, but they are dispersed," Halff said.

He added that there had been some exploration for unconventional oil and gas resources in Russia, but that the initial outcome of the work had not been that promising.

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"The first results do not support the rapid development [of unconventional resources]," he said.

The US and Canada have led the way in the development of tight oil, oil shale and shale gas production in recent years, reducing the need for imports.

Russia has vast resources of unconventional oil and gas too, but work has been slow as operators focus on conventional developments.

The national subsoil agency Rosnedra estimates that the most promising reserves of tight oil, the Bazhenov formation in West Siberia, may hold between 25 billion mt (182 billion barrels) and 50 billion mt of recoverable reserves.

Output from Bazhenov could provide between 800,000 b/d and 2 million b/d by 2020, or up to nearly one-fifth of the country's current total production of just over 10.2 million b/d, Russia's energy ministry estimates.

State-controlled Rosneft has joined forces with US major ExxonMobil to develop the Bazhenov reservoir.

They plan to begin drilling of the Bazhenov and Achimov reservoirs in West Siberia in 2013.

Rosneft also teamed up with Norway's Statoil to work on Russian tight oil assets in southern Russia and in West Siberia, as part of a major cooperation agreement the two signed in May.

CRUDE EXPORTS TO CHINA

Meanwhile, the IEA has also forecast a shift in the export patterns for crude oil from eastern Russia.

In its medium-term report, the IEA predicts more Russian crude heading to China by pipeline.

"We do see rising exports to China of Russian crude by pipeline," Halff said during the webinar.

At present, China receives around 300,000 b/d of crude from Russia through a branch of the East Siberia-Pacific Ocean pipeline, which has been in operation since early 2011.

Russia also exports similar volumes through the ESPO line via the export port of Kozmino on the Pacific Coast.

Halff said he anticipated crude ex-Kozmino to be directed increasingly to other markets.

"The crude via Kozmino will more likely be seen in the wider Asia area," he said.

China wants to increase its imports of pipeline oil from Russia. In June, the head of Russian pipeline operator Transneft said China wanted to triple their pipeline imports from Russia to around 900,000 b/d from the current 300,000 b/d.

This would be achieved by the building of a parallel line to the ESPO spur to China and a new link from the Pacific Coast southward.

The IEA, in a map in its report, seems to suggest 1.1 million b/d of Russian crude could be headed to China by pipeline by 2017, with only 100,000 b/d leaving for other markets in Asia via the port of Kozmino, compared with 300,000 b/d at present.

--Stuart Elliott, stuart_elliott@platts.com
--Margaret McQuaile, margaret_mcquaile@platts.com
--Edited by Alisdair Bowles, alisdair_bowles@platts.com

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