East/west tug-of-war for Russia’s barrels

Challenges and costs increase as ageing oil fields reach the ‘babushka’ stage

Russia’s upstream oil sector has seen easier times, as oil fields start to age and the cost of extraction climbs. Many of the country’s conventional producing assets are reaching, or indeed well into, the natural decline stage, which means maintaining volume and quality of oil production are becoming challenging. One stop-gap remedy has been to raise investment. Capital spending on production by major Russian oil companies has almost doubled since 2011, reaching RUB1.4tn ($22.3bn) last year. Although oil output has risen steadily in that time, it has not kept pace with capital invested–capex per barrel has jumped by 80pc since 2011. Matters are made worse by the effect of climate change on R