Putin Has Squandered Soviet Energy Legacy, Part 2 – The Washington Post

by | Sep 11, 2022 | Energy

Comment on this storyCommentGift ArticleThis is part two of a condensed and lightly edited transcript of an interview with Soviet and Russian energy specialist Thane Gustafson. In part one, he described the evolution of the Russian energy industry under President Vladimir Putin until the eve of the war in Ukraine. Part two picks up with him describing the impact of the war on Russia’s oil industry.Denning:  You say Putin’s war has set in motion a process that will drag down the long-term competitiveness of Russia’s oil industry. How so?Gustafson:  The big question is the long range effects, beginning about five years out. How the withdrawal of the services companies; the interruption of supply lines, of equipment; the exit of the Western majors; and the financial difficulties that the Russian government is going to have — all of those are going to act as drags on the ability of the Russian oil industry to continue modernizing. And yet it must continue modernizing because, like all natural resources, the initial resource gradually gets used up and you have to move out to increasingly marginal development opportunities, while constantly using new technologyAdvertisementThe traditional core of the oil industry in West Siberia is clearly in decline. The Russians even now are fighting a rearguard action there. Hence the importance of those three techniques I mentioned earlier. But the big thing to focus on as an example of the tests that lie ahead is [Rosneft CEO] Igor Sechin’s favorite project, Vostok Oil.LD: Why is Vostok so important and what makes it so challenging?TG: Vostok is a mixture of things, but the main thing to know is that it lies outside the administrative boundaries of West Siberia in a place called the Taymyr Peninsula, but it is the northeastern edge of the geology of West Siberia.  Some of that, such as the Vankor field, is already producing. The big question concerns the fields now being explored, of which one of the best known is the Payakh field. Sechin has said to Putin: If you grant me the full support of the state, I will produce for you a hundred million tons of oil a year from Vostok Oil — two million barrels a day — by 2030, and I’ll keep going from there.AdvertisementBut here’s the thing: Vostok Oil is a pile of challenges. It’s virgin territory. You’ve got to build a new port system to be able to export the oil to Asia by tanker. So that’s tied to the rate of global warming. You have to build an entire infrastru …

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