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Import Substitution in the Russian Oil and Gas Industry: Myths and Reality

  • ID: 5212545
  • Report
  • December 2020
  • Region: Russia
  • 65 Pages
  • National Energy Security Fund
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The import substitution process was started in earnest after the imposition of sanctions in 2014. Six years is a substantial enough period to summarize interim results.

On the one hand, the figures are not that bad: the industry already depends on imports by less than 50 percent. On the other, this is a typical average, while details are all-important.

And an important question is what exactly should be deemed Russian equipment, considering active use of foreign parts and especially software.

Some import substitution examples are a success indeed, but there are also failures that are no less obvious. The latter in fact emphasize the effect of precisely aimed sanctions.

The new and much more demanding OPEC+ deal has led to large-scale closure of old wells whose operations did not require much-imported equipment. At once, however, the question arose about how Russia will withdraw from the deal in the future and whether it will be able to promptly increase production. Only new projects can compensate for the closure of the old wells. Meanwhile, dependence on imports is greater there. And here is where lagging behind in offshore technology and hydraulic fracturing can have an effect.

In the gas sector, the key problems are also of an “offshore nature”; this goes for LNG production as well as the construction of offshore gas pipelines.

The completion of Nord Stream 2 by Russia on its own has become the main “hit” and a real detective story - so far without a happy end for Russia though.

From the new report you will learn:

  • What the Russian government deems national products
  • What new sanctions have been imposed on Russian oil and gas in 2020
  • The official results of import substitution by segments
  • Where the situation in terms of import substitution is most problematic
  • Why the greatest success has been achieved in the production of drilling equipment in Russia
  • How Chinese equipment manufacturers have driven out Western ones
  • What chances of import substitution are in hydraulic fracturing
  • Why geophysics is a failure in import substitution
  • What the prospects of development are for the Russian oil and gas industry on the continental shelf and offshore in general
  • Whether there is a Russian technology for large-scale LNG production
  • What problems Russian shipbuilding faces
  • How import substitution is regulated in the Russian oil and gas sector and who the main bureaucratic players are in this area
  • What special investment contracts (SPIC) 1.0 and 2.0 are
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1. Drivers behind Import Substitution     

2. Criteria for Grouping Oil & Gas Sector Products under Imported Category. Official Results of Import Substitution in Russian Oil & Gas Industry     

3. Import Substitution Success Story: National Drilling Equipment Buoys Upstream Segment     

4. ‘Pain Points’ of Import Substitution in Russian Oilfield Services Industry Hydraulic Fracturing and Seismic Surveying     
4.1. Hydraulic Fracturing     
4.2. Seismic Surveying     

5. Development Prospects for Russian Oil and Gas Industry Offshore in Context of Import Substitution     
5.1. Pressure on Offshore Projects     
5.2. Lack of Drilling Platforms and Subsea Production Systems     
5.3. LNG Production: in Search of Russian Technology     
5.4. Problems of Russian Shipbuilding     

6. Regulation of Import Substitution in Oil and Gas Sector     

Appendix 1. Plan of Import Substitution Measures for Mechanical Engineering for the Oil and Gas Industry in the Russian Federation

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All materials and sources used for issuing each report are thoroughly verified and analyzed by experts. The information is based on industry statistics, data of oil and gas companies, information of federal and regional mass-media, materials of conferences and round tables.

The analyst has pored on the following goals:

  • Analyses of oil & gas and power industries, political risks within the energy sector, geopolitical problems in connection with the production of hydrocarbons and their supply to the global market, strategic development of companies, new production and transportation projects
  • Consulting on the influence of political factors on the oil & gas business, decision-making within Russian energy companies and government bodies dealing with the energy industry
  • Development of energy business concepts in Russia
  • PR services for oil & gas corporations
  • Analysis of images and reputations of energy corporations