1990 1998 2010 20302

GDP

The forecast of development of the Russian The forecast of development of the Russian oil-extracting industryoil-extracting industry

GDP

1980

©©Institute of Economic Forecasting RASInstitute of Economic Forecasting RASMoscowMoscow

20020088

Main problems• Decrease of the available oil deposits. For the period of 1995-2007 excess of an oil extraction over stock gains from surveying has made about 1,3 billion tonns•Low oil refining depth (about 70%)• High degree of the fixed capital depreciation• Expected growth of capital intensity and operation costs• High share of taxes in revenues• Deficit of available funds for Investment

Share of the oil extraction in gross value added

3%

4%

5%

6%

7%

8%

9%

10%

11%

12%

13%

1990 1992 1994 1996 1998 2000 2002 2004 2006

Role of the oil sector in gross domestic product production

7% 8% 7%

3%

4%4%

3%

6%6%

6%

5% 7%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

2004 2005 2006

Trade profits frompetroleum sales

Export tariff

Mineral extraction tax

Gross Value Added

Dynamics of free flow and operation costs

Revenues Free flow Operation Costs

Mineral Extraction TaxExport Tariffs

Operation costs

The petroleum sector extraction sub-model’s scheme

Link between russian interindustrymodel and petroleum sector sub-model

Petroleum sector submodel

Russian Interindusty Model (Currently CONTO)

Price Indexes

Demand of petroleum products

Outputs and exports of oil extraction and oil refinery

Tax revenues (mineral extraction tax, export tariffs, profit and value added taxes)

Amount of investment in petroleum sector

Estimations of Capital intensity and Operation Costs I

In the basic regions of oil extraction (Near-Caspian, republic Komi, an other European part of the Russian Federation, Western Siberia and Ural Mountains, Eastern Siberia, the Far East) all deposits have been allocated on three categories : readily available and developed, mid-available and difficult and/or undiscоvered

As a result 18 categories of deposits (3 categories in each of 6 regions), each with the volume of reserves, development cost and operational were received

Estimations of Capital intensity and Operation Costs II

Further, we assumed that the most accessible deposits will be developed first of all. Thus we have received dynamics of growth of the capital intensity caused by exhaustion of cheap deposits and gradual transition on more and more expensive deposits.

So, capital intensity of development of deposits was settled up on the basis of volume of the extracted petroleum as an accruing result from the beginning of the forecast period

Approximation of Capital Intensity Growth

y = -0,003x3 + 0,1165x2 + 0,7062x + 26,459

R2 = 0,9923

0,00

10,00

20,00

30,00

40,00

50,00

60,00

70,00

80,00

0,00 5,00 10,00 15,00 20,00 25,00 30,00 35,00

Capital Intensity($/tn) Poly. (Capital Intensity($/tn))

Approximation of Operation Costs

y = -0.0057x3 + 0.2432x2 - 0.1572x + 25.568

R2 = 0.9926

0.00

10.00

20.00

30.00

40.00

50.00

60.00

70.00

80.00

90.00

100.00

0.00 5.00 10.00 15.00 20.00 25.00 30.00 35.00

Operation Costs($/tn) Poly. (Operation Costs($/tn))

Forecast dynamics of prices and costs

0%

100%

200%

300%

400%

500%

600%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Oil Prices Capital Investment per Unit Operation Costs per Unit

Oil price(URALS):156$/b in 2030

Oil price(URALS): 112$/b in 2008

Investment function I

)(tHLag 2))(( tExtractLag

)1()1()( tOutputtExtracttExtract

Investment lag, calculated on basis of total amount of extracted oil

Total amount of oil extracted from the beginning of forecast period – indicator, used to reflect the oil resources depletion

Investment function II

    )(

)(*)(

))((

0

tHLag

itInpatInv

tHLagRoundUp

i

I

)(

)(*)(

)(

)(

))((

tHLag

itInpta

tInv

tHLag

tHLagRoundDowni

II

“represent” oil prospecting, licensing,drilling

“represent” maintenance and modernization

Investment function III

))(((*)(

)()( tExtractLag

tCap

itCapta i

)))1)((( tExtractLagRound

))((*)(Pr

)()(

tExtractCapInttices

tInvtInp - deflated investment

Investment function IV

)(*)(*)1(*)( 321 tInvatInvatOutputatOutput III

)(Pr*))((*)()( ticestExtractOpCosttOutputtMCost

Oil Extraction’s Amount and Capital Investment Rate

0

10

20

30

40

50

60

150.0

200.0

250.0

300.0

350.0

400.0

450.0

500.0

550.0

600.0

Capital Investments Rate ($/tn) Oil extraction, mln. tn.

Forecast estimations of the oil extraction’s dependence from mineral tax size

400

420

440

460

480

500

520

540

560

580

600

2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030

ME Tax=15 ME Tax=25 ME Tax=35

Oil Extraction and Exports (MET=15)

0

100

200

300

400

500

600

2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030

Oil Extraction,mln. tn. Oil Export,mln.tn.

Oil Extraction and Exports (MET=25)

0

100

200

300

400

500

600

2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030

Oil Extraction,mln. tn. Oil Export,mln.tn.

Oil Extraction and Exports (MET=35)

0

100

200

300

400

500

600

700

2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030

Oil Extraction,mln. tn. Oil Export,mln.tn.

Oil refinery production (MET=15)

0,00

10,00

20,00

30,00

40,00

50,00

60,00

70,00

80,00

90,00

100,00

2006 2010 2015 2020 2025 2030

Aviation Gasoline

Motor Gasoline

Kerosene

Gas/Diesel

Heating Oil

Residual Fuel Oil

Other Products

Oil refinery production (MET=25)

0.00

20.00

40.00

60.00

80.00

100.00

120.00

140.00

2006 2010 2015 2020 2025 2030

Aviation Gasoline

Motor Gasoline

Kerosene

Gas/Diesel

Heating Oil

Residual Fuel Oil

Other Products

Oil refinery production (MET=35)

0,00

20,00

40,00

60,00

80,00

100,00

120,00

140,00

160,00

2006 2010 2015 2020 2025 2030

Aviation Gasoline

Motor Gasoline

Kerosene

Gas/Diesel

Heating Oil

Residual Fuel Oil

Other Products

Structure of oil refinery production

15.65% 16.77% 19.58% 20.28% 20.06% 19.48%

6.05% 6.28%6.24% 6.89% 7.67% 7.94%

29.20%31.19%

35.04%35.79% 35.19% 34.06%

26.99% 22.69%16.26% 11.80% 8.99% 9.38%

21.89% 22.84% 22.68% 25.04% 27.87% 28.85%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2006 2010 2015 2020 2025 2030

Other Products

Residual Fuel Oil

Heating Oil

Gas/Diesel

Kerosene

Motor Gasoline

Aviation Gasoline

Thank you for attention