IEA doubts Russia can replicate US unconventional oil, gas success
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
"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
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,"
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, firstname.lastname@example.org
--Margaret McQuaile, email@example.com
--Edited by Alisdair Bowles, firstname.lastname@example.org