Oil Giant Chief Predicts Shortfall in Investment in Russian Oil Industry

The shortfall in investment in the oil sector will reach R300bn in 2009, Rosneft head Sergey Bogdanchikov predicted today. In his words, “the shortfall in investment may lead to a reduction in oil production from 490m tonnes to 450m tonnes over five years”. Over the period between 2009 and 2013 the shortfall in investment may reach R2,800bn. Bogdanchikov said however that according to an optimistic scenario “should sufficient investment be made, oil extraction in the country could increase and reach 700m tonnes a year”.

Bogdanchikov also said that at present 93 percent of the new oil deposit development projects are unprofitable due to fiscal burden and high tariffs for natural monopolies. In his words, “fiscal burden and income tariffs constitute around 70 percent of the price of oil”. Thus, he said, “an oil company manages only 7 percent of the price of oil; everything else is taken away”.

Rigzone