Table of contents:
- The first stage of oil production in the republic
- Second stageand start of commercial production
- New century
- Perestroika times
- After the USSR
- Is there oil in Chechnya today?
- Production figures from 1993 to 2014
- Kadyrov's oil dream
2023 Author: Henry Conors | [email protected]. Last modified: 2023-11-26 12:05
Is there oil in Chechnya? An interesting question for those who are far from the oil and gas industry. The answer to it will surely surprise skeptics who believe that the Chechen Republic only enjoys perpetual subsidies from Moscow and does not give anything at the same time. Read our article about whether oil is being produced in Chechnya and how long it lasts.
The first stage of oil production in the republic
Oil production in Chechnya began even when people were not fully aware of the scale of what was coming to the surface of the earth. Back in the 17th century, oil was only used as a paint or ointment. The first hydrocarbon source was discovered near the village of Mamakay-Yurt and the extracted fuel was used as a currency: oil was exchanged for bread, timber and other goods that came from Russia.
However, despite the fact that oil was still extracted, by fishing, in the full sense of the word that we use now, it was difficult to call it. The active development of oil production started in 1833 after the discovery of the Grozny field, which was destined to become the cradle of Chechen oil.
Second stageand start of commercial production
But this production did not bring as much hydrocarbon raw materials as we would like. Modern well drilling methods have not yet been created. They began to think about their creation only in the 60s of the nineteenth century after the whole world was swallowed up by the "oil fever". Industrial production on a decent scale in Chechnya began in 1893, after the first oil fountain was hammered in the Starogroznensky district.
Famous foreign companies such as Rockefeller's Standard Oil and Shell have also attracted oil reserves in Chechnya.
After the revolution of 1917 and the coming to power of the Bolsheviks, all mineral resources were declared state property. All foreigners were expelled from the country and domestic mining began.
The Great Patriotic War became a powerful impetus that forced the production of more crude oil in Chechnya. Whether there is oil in Chechnya, no one cared - it should have been there. The mobilization of all sectors of the economy has led to the fact that production volumes have increased to 4 million tons of oil per year.
The gradual increase in production was observed in subsequent decades. The last and maximum peak in the extraction of hydrocarbon raw materials falls on 1971. At that time, almost 22 million tons were mined, which by those standards was 7% of the total Russian production.
However, all good things come to an end. The average daily flow rate fell, the deposits were depleted. By the end of the seventies, oil production in Chechnya decreased by 3.5 times, which led to the almost complete liquidation of the industry.
Later, in the 1980s and 1990s, new deposits were discovered that were supposed to take the industry back to its former glory. Of course, this had little effect - the last time in its history, production was 5 million tons per year.
Experts, having made simple arithmetic calculations, determined that during the existence of the Soviet Union, the volume of oil produced in Chechnya amounted to 400 million tons.
After the USSR
The collapse of the Soviet Union led to significant changes in the industry. The confusion that was going on in the new Russia did not allow to control all branches of the state scale.
The chaos that was going on in the country, which stood at the origins of a new history, allowed the formation of Ichkeria - an unrecognized state formation on the territory of the former Chechen-Ingush Autonomous Soviet Socialist Republic. In this regard, all crafts and deposits were proclaimed national property. But, despite this, this did not affect the real incomes of the population. The main reasons were:
- gradual decline of the extractive industry;
- failure of existing wells due to depreciation of Soviet equipment;
- decrease in production at new fields due to improper operation;
- complete collapse of the industry in the region.
Despite the fact that CRI stoppedexisted only in 2000, the full management of the development of new fields and the operation of existing ones was transferred by the decision of the government to PJSC Rosneft in 1998. By that time, only 850,000 tons of oil were being produced in Chechnya.
Today, the subsidiaries of PJSC Rosneft, Grozneftegaz, dominate the region. Fifty-one percent of the shares are owned, not surprisingly, by the oil and gas corporation itself. And the government of Chechnya owns the remaining 49%.
"Grozneftegaz" has all licenses for the development, operation, exploration of all fields in the region. The company is successfully coping with its work and in the first three years of operation it was able to improve production rates up to 1 million 800 thousand tons of liquid hydrocarbons.
Is there oil in Chechnya today?
Different experts answer this question differently. In the published annual report on the state of hydrocarbon reserves and subsoil as a whole, it is noted that oil reserves belonging to categories A + B + C1 + C2 in the Chechen Republic are small - 33 million tons. Considering that C2 reserves are only potentially estimated, the real prospective volume that can be produced is significantly reduced.
However, among those who worked in the fields of Chechnya back in Soviet times, there is an opinion that in the mountainous remote areas of the republic there are huge deposits of black gold, which at the moment, due to the technological insolvency of the industry, it is easy to extractimpossible.
How true is this assumption? There are many such examples in history when people felt the presence of oil under their feet, but others considered them mentally ill, and investors refused to invest their capital. The most striking example is the Spindletop field in Texas. All experts unanimously declared that there was no oil there and never was, when suddenly, at one fine moment, a fountain began to beat from an exploration well. Perhaps the same fate awaits Chechnya, but so far the statistics are inexorably leading to the fact that oil in the region will soon run out, and, at the same time, the oil industry in the republic will end.
Production figures from 1993 to 2014
As noted earlier, the statistics are not on the side of the oil field in Chechnya. According to official data, 1993 saw the highest volume in the last 25 years - 2.5 million tons. In the region of two million tons, oil was produced for another three years in a row - from 2005 to 2007. A steady decline in production begins in 2008 and continues to this day. In 2014, the minimum volume in the history of the Chechen fishery was recorded - only 450 thousand tons.
Kadyrov's oil dream
Negotiations between the government of Chechnya and the leadership of PJSC "Rosneft" have been underway for a long time on the transfer of all assets of the joint-stock company to the ownership of the republic. And if even 10 years ago it was almost impossible to imagine such a thing, then over time the situation began to change in favor of Ramzan Kadyrov. Rosneft heldassessment of its Chechen assets, which was a wake up call to the fact that the company is ready to part with them (11.8 billion rubles in total). This figure is comparable to what the region pays to the federal budget.
Whether there is oil in Chechnya or not, the head of the republic is not interested. He insists that it is necessary to invest in the industry, but the management of Rosneft sees no point in this.
One thing is known for sure: with the transfer of a controlling stake in the hands of Kadyrov, the field in Chechnya, as well as the industry as a whole, will receive a new life. There is no doubt that the head of the Chechen Republic always keeps his word and with his zeal and perseverance will achieve an increase in the flow rate of the wells in operation.
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