The cost of Russian oil. Russian oil price structure

2024 Author: Henry Conors | [email protected]. Last modified: 2024-02-12 02:43

Against the backdrop of the current economic situation, the cost of Russian oil is of interest not only to experts, but also to ordinary people. Russia belongs to the category of countries with a raw type of economy, and its well-being is directly related to the cost of black gold on the international market. It is problematic to unequivocally answer the question of how much Russian oil costs, since the concept belongs to the category of ambiguous ones. Complicating the situation is the huge number of grades, grades and types of raw materials that are mixed in a certain ratio to produce oil (Urals), the most traded on the international market. There is another category of raw materials that is not used or exported, but is used exclusively in the chemical industry.

What are the costs of oil development included in its price?

The cost of Russian oil includes industrial costs. These are the costs of lifting the well fluid from the bottom to the wellhead by the operator, the cost of water, which is sent to the reservoir to maintain pressure, funds for electrical energy and consumables. Not to be missedsight and wages of workers. The cost of depreciation of equipment used in the extraction of raw materials is taken into account. Let's pay attention in the calculations to the fact that during the extraction of raw materials, not all wells at the facility are involved in the process. Some of them may be under renovation. Difficulties are caused by the fact that the cost of funds for maintenance of equipment in different periods of time (day, month, year, etc.) can differ significantly, which will directly affect the cost of production. It is the numerous factors that form the final cost of black gold that stimulate the perception of the concept of cost as a purely objective and rather inaccurate value.

Dynamics of oil cost structure

The cost of Russian oil, excluding taxes and mineral extraction tax, tripled from 2005 to 2014, from 1,000 to 3,000 rubles. As for exports, their price has also increased. Previously, it corresponded to 600 rubles, and today it is 1800 rubles. In line with the trend, the severance tax itself also increased significantly, which acts both as a reflection of the cost of oil and as a reflection of the dollar exchange rate. As for the estimated production cost of raw materials in dollars, in the period described (2005–2014) it also increased. If earlier experts estimated a developed barrel at $5, today its price does not fall below $14. A significant increase in indicators is due to the fact that in recent years, the cost of black gold began to include the cost of exploration of new deposits and general investment inindustry. Russian oil reserves, explored back in the days of the USSR, have essentially exhausted themselves, and we have to look for new mineral deposits, which is not cheap. Companies began to take into account the operating costs.

What is included in the price of oil on the example of Rosneft

A concise study of the structure of oil prices based on the work of the Rosneft company, which is based on an assessment of the company's reports for six months, made it possible to make a number of calculations. Thus, it was possible to find out that the cost of raw materials for 55–57% consists of various taxes and fees that the company pays to the state. This suggests that most of the funds from each barrel of oil sold are spent on MET, customs duties, income tax, plus specialized contributions for company employees (personal income tax and social insurance).

Detailed percentage of pricing factors

Let's look at where the profit from the sale of oil by Rosneft goes:

• 10% of the price covers the cost of development and exploration of new deposits, the cost of installing and installing equipment, finding buyers and signing contracts, administering and ensuring business security;
• 8, 4% of the price covers the delivery of raw materials to buyers, whether they are end-users or not;
• 7, 6% is depreciation and depreciation of assets of a material type (buildings and structures, oil pipelines and equipment, etc.);
• 8, 6% -this is payment for the services of auxiliary companies, in particular for the repair of equipment or for the processing of fuel.

Only 13.2% of operating income. And it also calculates net interest expense and net profit from non-operating activities. The balance is subject to exchange rate adjustment and taxation. No matter what the cost of Russian oil is, Rosneft receives only 9% of the price that has formed on the world market.

Rosneft oil in dollar terms

Experts who attempted to calculate the approximate cost of producing Russian oil, as mentioned earlier, investigated the company "Rosneft". They managed to find out that the company divides all its expenses into three categories. This is:

• production and operating expenses;
• general and administrative;
• costs related to oil and gas exploration.

Reports indicate that the company's internal expenses account for 17.5% of the company's revenues. External costs are an additional 17% of the profit. Thus, oil production and its delivery cost the company no more than $35, but this is provided that the cost of fuel on the market corresponds to $100. If expenses can be optimized by reducing duplicated positions and reducing wages with bonuses, as well as in the case of an increase in the depreciation period of equipment, it turns out to reach a cost of 25-27 dollars. This issuggests that when the dollar rises, oil falls in price, but it is not the oil companies that lose, but the state, which receives taxes from the full cycle of the sale of petroleum products in excess of the cost of fuel.

What prices on the world market can the Russian oil industry withstand?

Oil and the Russian economy are closely linked, and the catastrophic decline in the cost of raw materials, at first glance, should frighten many domestic companies. According to information from official sources, during the holiday trading period on the world oil market (January 7, 2015), the WITI brand traded at a multi-year low, at $47.33. North Sea Brent did not fall below $50.77. Experts studying the markets for the sale of such resources as raw materials and oil give a very positive forecast, indicating that oil companies will be able to live 2015 with virtually no problems. According to the analytical agency Regnum, the break-even level of almost all domestic oil companies is at $30. Dry oil production, without associated costs, costs companies between $4 and $8. Despite the deductions by oil companies of about 70% of the profits to the state treasury, the industry has a fairly large reserve of capacity. The Russian Ministry of Energy plans to maintain fuel production levels of 525 million tons, despite tough Western sanctions and limited access to both credit and innovative technologies fordevelopment of raw materials on the shelf.

Profitability of oil production in Russia

The profitability of oil production in Russia is quite high, and, as we found out, the industry will withstand the load when the cost of fuel drops to $30. Today the Urals brand trades at the level of 61.77 dollars. The fall will hit only the state budget of the country. If companies work "to zero", they will not be able to make contributions to the state treasury, and the complete closure of the industry will "reward" the state with at least five million unemployed. Today, due to the economic situation in the country and due to the fact that the dollar is growing, oilmen are trying to produce oil at minimal cost. They stop investing in their companies, stop renewing funds, stop exploration, and maximize the depreciation period of equipment. The forecast promises an increase in fuel prices in the near future, the emergence of free funds and compensation for temporarily blocked expenditure items. If low prices on the oil market are maintained for a very long time, not only the oilmen themselves, but also the state as such, will have to face problems. Despite how much oil there is in Russia, its fields need to be developed, as already developed projects are depleted over time. The industry could face collapse if the percentage of hard-to-recover oil rises. Today it accounts for 70% of the total production volume. As a result, the cost of raw materials will increase, which will make the industry workpractically unprofitable.

Only surplus for imports

Despite the fact that active Russian oil fields provide a low cost of the latter, one should not forget that only surpluses are exported, the volume of oil products that the state cannot consume. With a reduction in production, there will be nothing to send for export. There is a possibility that the Russian Federation will quickly retrain from an exporter to an importer. As a result, Russian oil for rubles will be available only within the country, and the cost of fuel will be set by the state itself, without focusing on world markets. The situation is similar in China, which, being the world's fourth largest oil producer, is forced to buy fuel. The situation turned around in 2004. Indonesia, which until recently was a member of OPEC, is now actively buying raw materials. We can also mention Romania, which until recently supplied Europe with black gold and which now itself buys fuel in Kazakhstan and Russia.

The situation on the domestic oil market

Having de alt with the question of how much Russian oil costs, it is worth making a digression towards the structure of the domestic market. According to preliminary and generalized estimates, from 60 to 80% of the oilfield services market is occupied by four Western companies. These are Schlumberger and Baker Hughes, Weatherford and Halliburton, and the latter is currently engaged in active absorption of Baker Hughes. Enterprises are strictly regulatedsanctions imposed by America on Russia. There is a high probability that the participation of companies in the development of the Russian industry has been completely terminated, but there is no official confirmation of this fact. The Russian oil industry is highly dependent on imports. For example, work on the Arctic shelf without the participation of specialists from the United States and their equipment is simply impossible. About 30% of the total fuel in the country is provided by fracking. Drilling of inclined and horizontal wells, high-tech geophysical surveys, according to available information, were carried out by foreign specialists with the support of structures affiliated with them. Termination of partnership with America promises a big loss of oil production and a sharp increase in its cost. Of course, this is just one of the theories of the likely development of events, which can either be accepted or not accepted as true.

Why could the cost of Russian oil increase?

The cost of oil is influenced by many factors, ranging from the cost of oil-producing equipment to the price of developing new mineral deposits. Experts, systematically studying the factors that affect the price of such a resource as oil, do not give a very encouraging forecast. Oil companies have faced difficulties in extracting carbon, as the development of new fields requires significant investment. According to representatives of the Ministry of Natural Resources of the Russian Federation, the era of hard-to-recover resources is on the threshold, their figure has already exceeded70%. The depletion of oil reserves in traditional fields in the short term may cause a significant increase in the cost of the resource. To implement projects related to the development of oil in hard-to-reach deposits, specialized testing grounds were formed on the territory of the Tomsk Region, Khanty-Mansiysk Autonomous Okrug, and in Tatarstan. Many leaders in the oil industry emphasize that the quality of Russian oil has been gradually deteriorating in recent years. There is a need to use new technologies for additional fuel purification. Despite Russia's desire to invest in the industry and improve the quality of oil produced, all projects are still projects and domestic companies continue to use available resources. The companies themselves currently do not have free resources to invest in the modernization of production and in the filtration of raw materials from impurities that reduce its cost on the market and affect quality. The industry is in a static state, and oil companies are frozen in anticipation of an increase in the price of black gold.