Russian E&P Projects to Cost $100bn by 2020: GlobalData

Russian upstream projects will need $102.6bn by 2020 to maintain stable production, said analysts at GlobalData in a report December 15, the biggest such being Gazprom's producing Bovanenkovo field, needing $5bn over the next three years. Just over half the total – 55% – will be conventional oil and heavy oil will be another 7%. The cheapest in terms of capex per barrel of oil equivalent are gas projects.

Onshore projects will be responsible for over 85%, or $88bn by 2020, the rest being shallow water projects.

GlobalData expects that Gazprom, together with Gazprom Neft, to lead the country in capital expenditure, investing $37.5bn into upstream projects in Russia by 2020. Rosneft and Lukoil will follow with $30.9bn and $14.1bn invested into Russian projects over the period.

After Bovanenkovo comes the planned Kovykta gas field with $4.3bn over three years in capital expenditure. Rosneft's producing Samotlorskoye field will need a capital investment of $2.6bn by 2020.

GlobalData reports the average remaining capital expenditure per barrel of oil equivalent (capex/boe) for Russian projects at $6. Onshore gas projects have the lowest remaining capex/boe at $4.80, followed by onshore oil and onshore heavy oil developments with $6.80 and $7 respectively. Shallow water oil projects have the highest remaining capex/boe at $11.40, while shallow water gas projects need $8.70 per boe in remaining capital expenditure.