Virtually all oilfield services companies from unfriendly countries, including the big four Halliburton, Schlumberger, Baker Hughes and Weatherford, announced last year that they were suspending operations in Russia.
Some of them decided to sell their assets to local management, which continues to work independently without the support of global companies and access to technological resources.
“The most demanded technology for maintaining oil production is hydraulic fracturing (HF). Now 52% of the market in the Russian Federation is represented by companies from unfriendly countries, and the share of domestic hydraulic fracturing equipment is less than 1%. The Russian RSS market (rotary-steered systems, equipment that allows you to control the trajectory of the well) is 100% dependent on imports. Offshore technologies are also highly dependent on it,” Yakov & Partners experts write in their study “Prospects for the development of the oilfield service industry in Russia until 2030”.
“The current model of interaction between vertically integrated oil companies and OFS (oilfield services, the oilfield services market – ed.) does not allow domestic oilfield services to invest in research and development (R&D), which leads to a high dependence on Western technologies, and investment opportunities for independent oilfield services in Russia are severely limited,” the study states.
“Russia has every chance to increase the size of the oilfield services market from $20 to $24 billion by 2030 and keep production at a high level, but for this we must finally begin to solve the accumulated problems. Otherwise, it risks losing up to 20% of its production, primarily due to the lack of high-tech services provided exclusively by Western companies,” experts write in their study “Prospects for the development of the oilfield service industry in Russia until 2030.”
As the authors note, in order to level the risks of a decrease in production and the development of the oilfield service market in Russia until 2030, it is necessary to: approve a list of priority (critical) technologies for the development of domestic oilfield service segments; to agree with the oil companies the target volumes of demand and the necessary parameters of the quality of technologies; coordinate with oilmen, equipment manufacturers, oilfield services the distribution of activities within the framework of the roadmap for the formation of technologies and state support measures for oilfield service segments.
However, what is actually happening
According to the results of the 3rd quarter of 2022, one of the divisions of the world’s largest oilfield services company SLB (formerly Schlumberger), operating in Russia and Central Asia, increased revenue in the regional market by 25% compared to the previous quarter.
We wrote about this earlier with reference to Reuters, who are familiar with the company’s reporting.
- SLB expanded its activities in Russia through the contracts of competitors who left the market;
- record earnings expected in 4Q 2023;
- the decision of the SLB management to remain on the Russian market caused sharp criticism, but in the end this step paid off;
- the company does not violate the sanctions imposed against the Russian Federation by the US and the EU;
As a result, by the end of December 2022, SLB hired about 70 new employees in Russia and remains a major foreign employer with about 10,000 jobs.
The message How the Russian oil service lives under the sanctions first appeared on TEKNOBLOG.