Russia boosts oil drilling for second year despite sanctions – Bloomberg

Despite Western sanctions, Russia increased oil well drilling for the second year in a row in 2023 and has come close to the record for the entire post-Soviet period, writes Bloomberg.

"Russia is substantially more independent in its oil-field services than generally appreciated," commented Ronald Smith, an oil and gas analyst at Moscow-based BCS Global Markets.

In the first 11 months of 2023, according to Bloomberg, Russia drilled oil production wells with a total depth of 28,100 km. In 2022, according to the agency, Russia drilled wells with a total depth of 28,000 km, reaching the maximum figure in the last ten years.

Over 12 months of 2023, the scale of drilling could reach a record for the entire post-Soviet period, the agency notes, citing data from analysts Kpler and Yakov and Partners (the former Russian division of McKinsey). According to their calculations, overall, the volume of production drilling in the country exceeded 30,000 km last year.

The number of wells launched in the 11 months of 2023 has already surpassed the number for all of 2022, at 7,930 versus 7,840. The number of wells completed from January to November is near a five-year high of 8,540, compared with 8,580 for all of 2022.

Rystad Energy estimates that only about 15% of Russia's domestic drilling market depends on technology from so-called unfriendly nations. The withdrawal of major Western oil service companies from the Russian Federation had minimal impact, as it mostly left their local subsidiaries untouched.

These businesses "were mostly sold to management, retaining the know-how built up over the years," says Viktor Katona, a leading crude oil analyst at Kpler.

In 2023, the United States imposed sanctions on dozens of companies that manufacture drilling equipment and develop new production technologies, seeking to limit Russia's future mining capabilities. Since 2022, comprehensive restrictions on the export of equipment, technologies and services for the energy sector in Russia have been introduced by the EU.

In addition, the world's two largest oil service providers – Halliburton and Baker Hughes - sold their Russian divisions and left Russia. Two more giants – SLB and Weatherford – said that they continue their activities in the country.

In March 2022, SLB announced that it would immediately cease new investments and technology deployments in Russia. But, unlike Halliburton and Baker Hughes, which sold their businesses, it continued operating in Russia and even took part in mobilization activities in the country.

The National Agency on Corruption Prevention (NACP) added the American oil service company SLB (Schlumberger) to the list of international sponsors of the war.