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Only 36% of oil reserves profitable in Russia, energy minister says

This is related to worsening of development opportunities, according to the minister

MOSCOW, January 27. /TASS/. Just 36% of 30 bln tonnes of oil reserves are profitable, Deputy Energy Minister of Russia Pavel Sorokin wrote in his article for the Energy Policy magazine.

"According to data of fields’ development economics inventory completed on the instruction of the Russian government, just 36% out of 30 bln tonnes of recoverable reserves of Russian oil are profitable in current macroeconomic environment. This is related to worsening of development opportunities: growing water cut, the need to build costly wells of complex design, low permeability and compartmentalization of reservoirs, the move to marginal areas and beds with low thickness, and so on," the official said.

"All that does not merely increase the lifting costs but also moves upward risks of failure to confirm target development figures because of the complexity of processes modeling and drilling errors, for example, leaving the pay bed in horizontal drilling. The result is the actual profitability of drilling may considerably differ from plans for certain assets and reserves will not be confirmed," Sorokin said.