Shale oil boom possible in west Siberia - Erste

06 February 2013 14:57  [Source: ICIS news]

LONDON (ICIS)--Russia has the potential for a shale oil boom similar to that which has taken place in the US, based on reserves that could be exploited in west Siberia, Austria-based bank Erste Group Bank said on Wednesday.

“While Russia has viewed shale gas as largely negative – with large shale gas deposits in Poland and the Ukraine a threat to Russian gas exports – the take on shale oil is different,” Gerald Walek, an analyst at Erste, said in a note to investors on prospects for CAToil, an oil-field services company which operates in Russia and Kazakhstan.

“The US Geological Survey estimates the overall supply of Russian shale oil in west Siberia – mainly in the Bazhenov shale formation – at 80-140bn barrels; even a fraction of this would significantly boost Russia’s current conventional oil reserves of 67bn barrels,” he added.

Bazhenov’s geology is similar to that of North Dakota’s Bakken shale, where crude oil production has more than doubled in just two years, Walek noted.

To tempt companies such as CAToil into meeting the higher expenses associated with the development of shale oil reservoirs, Moscow would have to grant tax breaks to the firms, the analyst said.

“But the more tax breaks Moscow grants, the less the future tax revenue from oil will be, and this would certainly hurt, given the fact that Moscow is highly dependent on taxes from oil and gas, which accounts for around 50% of its tax revenues,” he concluded.

By: Tom Brown
+44 208 652 3214

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