Date post: | 04-Jan-2016 |
Category: |
Documents |
Upload: | daniel-lloyd |
View: | 213 times |
Download: | 0 times |
1
The Challenges Ahead:Evolution of the MarketFor Oilfield Services andEquipment in Russia
Thane GustafsonCambridge EnergyResearch Associates
Moscow,December 2003
2
Russian Oil Production Trends(million barrels per day)
0
2
4
6
8
10
12
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
Russian Crude Oil ProductionWest Siberian Production
3
Source: Cambridge Energy Research Associates.30704-2
Projected Production by 2010: The West Siberian “Brownfield” Will Still Dominate (million barrels per day/million metric tons per year)
Timan-Pechora
.5/25 Condensate
.3/15Undiscovered
.2/11
Sakhalin
.5/24
East
Siberia
.2/8
RussianCore8.3/413
Russian
Sector
of the
Caspian
.2/8 TOTAL RUSSIA
10.1/503
4
20122008
Source: Cambridge Energy Research Associates.30709-8
From Brownfield to Greenfield:How Tight the Bottleneck?How Long the Delay?
World oil pricesExport capacity
Political riskTax regime
ROC ambitionsGas options
DiminishingReturns fromBrownfields
GrowingGreenfield
Opportunities
5
The Leading Russian Companies Have Kept their Lifting Costs Low (2002): But How Long Can They Continue Doing So?
-
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
Tatne
ft
Rosne
ft
Surgu
t
TNK-BP (c
heck
)Lu
koil
TNK Int.
Sibnef
t
Yukos
Sibnef
t (e)
Yukos
US
$ p
er
bb
l
Average
Source: UFG Research estimates, TNK-BP
6
What will Drive Cost Trends in the Brown Fields of West Siberia?
• The dollar prices of key ruble-denominated inputs will continue to increase:— Steel: Prices of casing, pipelines, processing equipment will triple
by 2010— Wages: Will also triple— Electricity: Many pumps are electrically-driven; prices are being
deregulated— Oil tools and rigs: Most of these are produced in Russia; prices will
rise with expanding demand and real appreciation of ruble • Opportunities for increased productivity?
— Western and offshore competition: Favored by currency movements, but difficult to overcome habit of choosing lowest-cost contractor
— Potential from Spin-Offs and Competition: May prove to be illusory as monopolist faces monopsonist at local level
7
Growth of the Work-over and Service Market
Source: TNK.Source: OMZ
8
Outlook for Categories I and II: Well Maintenance, Workovers, and Field Redevelopment
0
0.5
1
1.5
2
2.5
3
2003
2005
2007
2009
Year
$Billions
/year
Workovers andRedevelopment
WellMaintenance
9
Outlook for Category III: New Wells in Old Fields
0
1
2
3
4
5
6
7
2003
2004
2005
2006
2007
2008
2009
2010
DevelopmentDrilling and WellCompletions
10
0
5000
10000
15000
20000
25000
30000
35000
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
me
tre
s d
rill
ed
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
Expn Drilling Devt Drilling % exploration
Sources: InfoTEK, RPI FSU O&G Statistics Yearbook, Oil & Capital
Exploration and Development Drilling in Russia
11
Evolution of Demand for Oilfield Equipment and Services to 2010
0
2
4
6
8
10
12
Year
Ca
pe
x i
n $
Bil
lio
ns
Category V
Category IV
Category III
Categories I and II
Category IV is New Wells in New Fields (incl. transportation, etc.) Category V is New Fields in New Areas (incl. new infrastructure, etc.)
12
Source: Cambridge Energy Research Associates.30709-5
Russian versus Western?Who Has the Market Share?The picture in the early 1990s
PercentRussian
MarketShare
Lowtech
Western dominance
Russian dominance
Hightech
Edge
(In theory)
13
Source: Cambridge Energy Research Associates.30709-6
The Market Shifts in the Later 1990s:The Western Opportunity Fades
PercentRussian
MarketShare
Lowtech
Western dominance
Russian dominance
Hightech
1
23
4
5
1 Ruble devaluation in 1998
2 Rise of Russian service companies
4 Some civilian conversion
5 New generation of Russian specialists
3 Hybridization (e.g., hydrofracturing)
Opportunity
14
Source: Cambridge Energy Research Associates.30709-7
Will the Market Shift Again in the Mid-2000s? Hybrids May Dominate, but Who Will Own Them?
PercentRussian
MarketShare
Lowtech
Western dominance
Russian dominance
Hightech
Western-ownedRussian?
Or Russian-ownedWestern?
1
2 3
4
5
6
2 Russian inputs more costly3 Growing need for “advanced” development and services (DOFF?)4 Russian local content requirements5 Growing Russian skills6 Russian investment in West
1 Ruble devaluation in 2003appreciation
15
Possible Consequences of the Recent Troubles for the Oil Services Market• State Campaign against “Rape and Pillage”?
— Pressure to return to “traditional” emphasis on infill drilling as opposed to “harmful” techniques to maximize per-well flow rates
— Ban on “cherry-picking” by shutting unprofitable wells— Stricter enforcement of FDPs mandated by institutes
• Pressure to explore more than is economically justifiable?— Rejection of 10-year R/P ration in favor of traditional 40-year— Implicit or explicit threats of license removal for non-compliance— Pressure to begin premature development of “rim” opportunities?
• Some companies favored over others?— Rosneft, LUKoil, Surgut move ahead— YukosSibneft slows down?— TNK-BP becomes leader?
• These possibilities will impact the size and shape of the oil services market
16
Source: Cambridge Energy Research Associates.90304-7
THE BIGGEST CONSTRAINT AHEAD:The Race Between Crude Oil Available for Export and Export Transportation Capacity
9
1995
MillionBarrels
perDay
1990
8
0
6
5
4
7
3
2
1
2000 2005 2020 2015 2020
East Asia
Barents Sea
Southern Druzhba
Northern DruzhbaOther
PrimorskButinge
VentspilsOdessa
Tuapse Novorossiysk
Non-FSU Exports
17
Possible Implications of Recent Troubles for Oil Transportation—and Thus for the Oil Services Sector
• Tensions between the private sector and the state could produce slow-down or paralysis in decision-making— Yukos’s Daqing project may lose speed; yet Nakhodka pipeline is
too uneconomic to go forward— Murmansk pipeline and terminal could get tied up in battles over
state-monopoly principle and right of private stakeholders
• The state may move to contain or shut existing loopholes for exports— By ending the “90% rule” on oil products export tax—and then
raising export taxes— By raising railroad tariffs to snuff out non-Transneft crude exports
• These could result in constrained exports, shut-ins, lower production—in a word, lower activity—and thus less spending on services