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October 13, 2022

REW Addresses Problems and Prospects of Russian Oil and Gas Industry

Participants in the session ‘Oil and Gas: Technological Sovereignty’ at the Russian Energy Week International Forum 2022 agreed that major oil and gas corporations are changing how they work with private technology suppliers due to pressure from sanctions and the implementation of accelerated import substitution projects. The session was organized by the Russian Energy Agency of the Ministry of Energy of the Russian Federation and the Roscongress Foundation with the support of the Ministry of Energy of the Russian Federation.

Whereas in the past technology companies were beating down the doors of major customers, today the process has reversed: oil and gas holdings are increasingly turning to companies that can ensure their technological sovereignty, Innopraktika First Deputy General Director Natalya Popova said.

This issue also has a problematic side: when companies speak about import substitution, they are usually talking about the insourcing format. “They prefer to develop everything in-house. But given that such solutions are already on the market or there are companies that are already developing similar products, funding for these projects is duplicated,” Popova said.

Oleg Zhdaneev, Deputy General Director and Head of Import Substitution in Oil and Energy Complex Competence Centre of by the Russian Energy Agency of the Ministry of Energy of the Russian Federation, confirmed that there is a problem with the substantial duplication of funding, particularly for the development of specialized software. “However, with the emergence of the Industrial Competence Centre (ICC), which aims to ensure the accelerated development and implementation of specialized software solutions, we can see that the idea of a joint industry partnership will now be implemented.”

It is difficult to overestimate the importance of the work of the ICC, which is a proper and much-needed initiative, said Vadim Kulikov, Director of the International Fund for Technological Development. Nevertheless, Kulikov focused on the problem of project replication. “These are often internal projects. The projects that we approved as a result are usually one-man show projects. Large companies are introducing nifty systems for large amounts, but why only in-house?” Kulikov asked, suggesting that such companies should be required to replicate these solutions.

Another key issue in terms of technological sovereignty is how to ensure the continuity of the oil and gas industry, while simultaneously introducing Russian technologies.

For example, Gazprom currently places special emphasis on the company’s technological sustainability. This concept rests on three pillars: reliability (business continuity), independence of sanctions (import substitution), and the elimination of cyber threats, said Anton Dumin, Director of the Information Technology, Automation, and Telecommunications Directorate of Gazprom Neft.

According to the most optimistic forecasts, renewable sources will account for 35% of the world’s energy consumption by 2050, while the remaining 65% will continue to come from fossil fuels. At the same time, coal and oil production should remain at around the same level as today, while gas output should increase by roughly 40% to maintain a balance of 65% of fossil fuels in electricity consumption.

For example: fossil fuels currently account for 85% of global energy consumption, although in Russia this figure is 83%. “If we say that we need to ensure such levels of oil and gas production, then we need to understand what target base this will ensure. According to our estimate, in order to maintain such a serious volume of oil and gas production, by 2050 we need to increase [output] by approximately 27 billion tonnes of standard fuel compared with the current level,” Shpurov said.

Of these 27 billion tonnes, new technologies should ensure the extraction of 12 billion tonnes. “In order to incorporate these 12 billion tonnes, we need to create technologies that will allow us to do this,” Shpurov said.

At the end of the meeting, the participants learned about the experience of their foreign colleagues. In particular, China has roughly 45% external dependence on gas and over 70% on external oil, said Jian Jiao, Deputy General Director for Foreign Economic Cooperation at Xuan Yuan Industrial Development. For this reason, all processing enterprises that primarily work solely with imported raw materials are equipped with the most advanced technologies and equipment. Otherwise, such activities would be unprofitable for China. In this context, Jiao offered his Russian colleagues Chinese solutions in exchange for increased imports of Russian oil and gas.

For more about the Russian Energy Week International Forum 2022, please visit the official