Russian Oil Reserves - No Longer a Secret

By Lada Ponomareva, July 15, 2013

Russia has removed the mark of secrecy from its oil reserves balance and officially told the world about the volume of its reserves. Natural Resources Minister Sergey Donskoy announced that as of January 1, 2013, the country's oil and gas reserves were 17.8 billion tons and 48.8 trillion cubic meters of gas respectively.

Active geological surveys have allowed Russia to significantly increase its reserves of natural resources about current production. According to the Ministry, in 2012 growth in discovered reserves of liquid hydrocarbons was 650 million tons, while discovered gas increased 800 billion cubic meters.

Executives of production companies themselves believe that removing the secret nature of data on hydrocarbon reserves is necessary to Russia overall, since the country has huge potential and keeping such information secret from investors was not logical and "hurt Russia itself".

Still, companies did not expect many surprises following official disclosure of the data, since all large enterprises in the sector conducts international standard SEC and PRMS audits. "We know our own reserves", Lukoil reported.

According to Grigory Birg, the co-director of the Investcafe analytical center, Surgutneftegaz is the only large public company which does not provide free access to information on its reserves and does not conduct audits meeting international standards. The company only publishes the size of growth under the Russian classification system. Now however, Surgutneftegaz will have to open up data on its resource base. "With the little information available, one can get an idea of Surgutneftegaz' recoverable reserves", Birg said, "Reserves have been growing continually and if proven reserves in 2006 were 2.2 billion tons of oil, by 2012, they had reached 2.8 billion tons".

ITAR-TASS reports that Russian President Vladimir Putin issued instructions to declassify mineral wealth resources in February of this year. In May the Natural Resources Ministry proposed lowering the level of secrecy for data on oil and gas reserves and prepared a bill to that effect.

At the same government meeting, Aleksandr Popov, the former head of Russia's subsoil agency, Rosnedr, which conducts audits of Russian reserves said reported volume was about 30% lower than real figures. However, Russian production companies will be forced to ask Western auditing companies for services since existing methods of assessment in Russia differ from methods used in the West. Experts say that the method used in Russia only accounts for quantity, without taking into account the quality of deposits which is also a component of their real value.

Popov said that this was one of the reasons Russia was only eighth in the world in terms of proven reserves and that employing international standards would raise the country to third place.

Konstantin Simonov, the head of the National Energy Security Foundation, said that if tight reserves were counted alongside traditional reserves, Russia could easily rise higher in the world ranking for liquid hydrocarbons. Rosnedr plans to implement a new system for classifying reserves by the end of the year.

The official reserve balance document fully discloses the quantity, quality and movement