According to the company’s benchmark Statistical Review of World Energy, it’s Iran, who climbed to the top of the global standings, … I am a Senior Fellow at the Atlantic Council and the Founding Principal of International Market Analysis, a Washington, D.C.-based global risk advisory boutique. Putin, for one, hates American shale, which he blames, with some good reason, on the weak price of oil in recent months. Get this delivered to your inbox, and more info about our products and services. Output increases in the Permian Basin of Texas, as well as other major formations, have helped the U.S. become the world's largest producer of oil. The kukersite deposit in the Leningrad district (fig. Years of breakneck growth, at the expense of crude kingpins in the Middle East and Russia, have come to an end. Also on Wednesday, British oil giants BP have Russia’s natural gas reserves estimate at 32.9 trillion cubic meters from 44.6 trillion in last year. In the interim, many shale oil producers will be forced into bankruptcy. US shale has lapped up many of the barrels that OPEC and Russia have ceded, whether propped up by debt or not, and they very well may do so again, leaving Russia … If Russia beats shale than we are back to the Bush era relying 100% on middle east oil. Russia has become the biggest global producer of crude oil with almost no contribution from shale, a sometimes technically difficult and expensive resource to … So far, Chinese NOCs have identified over 50 billion barrels of shale oil resources and 10 billion barrels of oil-initially-in-place (OIIP) in the major conventional oil-producing basins. "In spite of all of the economic benefits, we do not need it and we will never do this," Putin said. Russia refused to participate in production cuts that would reduce output by some 1.5 million barrels per day (bpd). Back in 2014 when crude prices began to slip, global markets looked to OPEC – led by swing producer Saudi Arabia – to cut production and support prices. Tatneft and Royal Dutch Shell have a joint venture that covers some twelve different tar sands deposits on a block, with the ultimate goal of 100 000 bpd in a few years time. My consultancy focuses on political risk, national security, and energy policy, especially in Russia/Europe/Eurasia, and the Middle East. In October 2019, Russia’s Finance Minister Anton Siluanov claimed that the country would be able to sustain the effect of the oil price drop to $20 or $30 per barrel for three years, thanks to the National Wealth Fund (currently valued at over $170 billion) and stricter fiscal regulations, which allowed Russia to balance its budget based on the lowest break-even oil price in a decade. Saudi oil minister Ali Naimi tried (and failed) to do something similar in 2014 and 2015 to the US fossil fuel industry, but this time things are different:  the downward pressure on demand for oil caused by the global coronavirus outbreak and slowdown in global economic activity means we are in a whole new ball game. As shown in the next table, in terms of shale oil reserves, the number one country as reserves of shale oil is Russia. Furthermore, the 25% plunge in oil prices, with its negative impact on American shale producers, is likely to complicate the perspective of re-election for Donald Trump, who has championed the oil and gas sector, growth of the domestic economy, and employment. I cover energy, security, Europe, Russia/Eurasia & the Middle East, EY & Citi On The Importance Of Resilience And Innovation, Impact 50: Investors Seeking Profit — And Pushing For Change, Michigan Economic Development Corporation With Forbes Insights, Climate, Energy, And Essential Infrastructure In Texas, How Interior Sec. Radiating out further from ground zero in the shale patch, there are the financiers. Nominee Haaland Can Support Biden’s Climate Agenda Even In Her Own Fracking-Happy New Mexico. Trump would have to make a strategic offer that Russia could not resist to get some cooperation on oil prices. A devastating global pandemic and a reckoning with Wall Street appear to have broken the resolve of the shale wildcatters who turned the U.S. into the world’s biggest oil producer. Tatarstan, in cooperation with the Federal Ministry of Natural Resources, established two scientific experimental ranges in 2015 for the development of technologies for exploiting bitumen and shale oil. Since 2011 the USA surpassed Russia to become the world’s largest producer of natural gas. Mikhail Svetlov | Getty Images News | Getty Images, Shale Bonds: The new way oil drillers are raising capital. The kukersite deposit in the Leningrad district (fig. So far, Chinese NOCs have identified over 50 billion barrels of shale oil resources and 10 billion barrels of oil-initially-in-place (OIIP) in the major conventional oil-producing basins. Russia has made yet another technological breakthrough thanks to the Western sanctions: it has developed its own technologies for the exploration and production of hard to extract shale oil. The Pandemic Has Broken Shale and Left Oil Markets in OPEC Hands ... Years of breakneck growth, at the expense of crude kingpins in the Middle East and Russia, have come to … I am a Senior Fellow at the Atlantic Council and the Founding Principal of International Market Analysis, a Washington, D.C.-based global risk advisory boutique. Russia has made yet another technological breakthrough thanks to the Western sanctions: it has developed its own technologies for the exploration and production of hard to extract shale oil. Both price points will have major collateral damage for oil producers in the Middle East, Europe, Russia and United States including shale oil producers. Got a confidential news tip? China’s shale gas industry has moved at a faster clip, going from 120 mmcfd in 2014 to 1450 mmcfd in 2019. These developments break the de facto Russian-Saudi oil cartel, jeopardize the U.S. shale patch, and endanger President Donald J. Trump’s re-election bid. China’s shale gas industry has moved at a faster clip, going from 120 mmcfd in 2014 to 1450 mmcfd in 2019. Russia does not set oil prices or dump oil at below market prices, nor did it, or can it, threaten to add 1 million or more barrels of production. Meanwhile, the US oil benchmark Texas West Intermediate (WTI) fell 6.5% on Tuesday to $26.80 per barrel. But, critics of the process have sounded the alarm over its negative environmental impacts, including air and groundwater pollution and increasing earthquake risk. Two methods have been developed to extract petroleum products from oil shale. Russia has the biggest shale oil reserves in the world. It needs to keep Ukraine under the thumb and beholden to Russia for its fuel supplies. Also on Wednesday, British oil giants BP have Russia’s natural gas reserves estimate at 32.9 trillion cubic meters from 44.6 trillion in last year. Russia Targets U.S. Shale With Oil Price War. Trump has even raised the notion of relaxing some oil-sector sanctions on Russia as a way to buy Moscow’s support for bailing out shale. That didn’t really lead to a hike in price, though, because the US shale industry kept producing and exporting oil. A devastating global pandemic and a reckoning with Wall Street appear to have broken the resolve of the shale wildcatters who turned the U.S. into the world’s biggest oil producer. As soon as U.S. shale leaves the market, prices will rebound and could reach $60 a barrel, Rosneft’s Igor Sechin said recently. Increasing attention is given to unconventional oil. The EIA's short-term energy outlook does not have demand rebounding until 2022 at least. Democrats win as it gives them more incentive to go green as American Oil has very little options to replace shale. Radiating out further from ground zero in the shale patch, there are the financiers. "You can rest assured that Russia shall always be a responsible actor in the global energy market," Russia's Putin said on Wednesday. © 2020 Forbes Media LLC. At the same time, oil-shale mining and processing raise a number of environmental concerns, such as land use, waste disposal, water use, waste-water management, greenhouse-gas emissions and air pollution. In 2017 the EIA concluded that even at prices around $30 per barrel, some 50% of US shale deposits would still be economically viable. The pandemic has led to a dip in demand for oil, and, after failed OPEC negotiations and the subsequent price war between Russia and Saudi Arabia, oil prices have plunged. U.S. shale energy production is on course to overtake the output of Russia’s entire oil and gas sector by 2025, influential new forecasts have shown. Years of breakneck growth, at the expense of crude kingpins in the Middle East and Russia, have come to an end. As shown in the next table, in terms of shale oil reserves, the number one country as reserves of shale oil is Russia. It has many financial reserves and can live with low oil prices for much longer than the Saudis and other oil producing countries. Lenient bankruptcy regulations, too, were critical as they allowed companies to shed billions of dollars in debt and restructure their operations. Following the failed negotiations between Russia-led OPEC+ countries on Friday, Saudi Arabia now intends to boost its output to over 10 million barrels per day, while offering $6 to $8 per barrel discounts to consumers in Asia and northwestern Europe – key markets for Russia’s oil exports. Meanwhile, in a bid to retain a key stake in its European export market – Russia supplies a quarter of all Europe’s (rising) natural gas demand – Moscow is set on doing all in its power to protect its ‘captive’ market. You may have seen the headlines being generated the past couple days by the oil “price war” going on in the Eastern Hemisphere, causing global stock markets to plunge. Earlier this week, the U.S. Energy Information Administration (EIA) said in a monthly forecast that U.S. crude oil output from seven shale formations was projected to rise to a … Output increases in the Permian Basin of Texas, as well as other major formations, have helped the U.S. become the world's largest producer of oil. That trend continued as the US surpassed both Saudi Arabia and Russia as … Weaker operators perished. Beyond electricity in the Balkan northwest, oil shale is non-commercial in the Russian Federation at the current time. Russia is estimated to hold the world's largest technically recoverable shale-oil resources. March 6 2020 Just as the coronavirus outbreak wreaks havoc on the oil market, Russia has spotted an opportunity to hurt rivals in the US shale patch. Russia is estimated to hold the world's largest technically recoverable shale-oil resources. According to the company’s benchmark Statistical Review of World Energy, it’s Iran, who climbed to the top of the global standings, … Even if Trump does not save the shale industry it's still going to take years to kill off the 10+ million BOPD we produce from shale. Russia doesn't need Crimea's oil and gas reserves; it just needs Ukraine not to have it. The US shale boom was a factor behind the recent oil price collapse that toppled the Brent crude benchmark from a mid-2014 high of $115 a barrel to … This advance is even more significant given that the sanctions have stopped Russian oil companies from using western equipment. Hydrocarbons are substances made entirely of hydrogen and carbon. More than 80 deposits of oil shale have been identified in Russia. Hence, this is not a purely economic measure taken by the Kremlin, but rather a geopolitical one. The U.S. Department of Energy was not immediately available for comment when contacted by CNBC on Wednesday. ... What might have provoked Russia to retaliate against American oil producers is the U.S. sanctions imposed on … American companies closed their least productive wells and focused on better performing sites – a strategy known as high-grading. In addition to consulting for both the public and private sectors, I testify regularly before the U.S. Congress, and appear on Bloomberg, CNN, FOX, BBC, Al Jazeera, and other TV channels. The $60-$90 per barrel (bbl) break-even prices that shale drillers had grown accustomed to no longer existed. Data is a real-time snapshot *Data is delayed at least 15 minutes. Russian President Vladimir Putin talks during the Russia Calling! A devastating global pandemic and a reckoning with Wall Street appear to have broken the resolve of the shale wildcatters who turned the U.S. into the world’s biggest oil producer. Kerogen is a part of rock that breaks down and releases hydrocarbons when heated. This is a familiar attempt to protect market share and to squeeze out American shale and other higher cost producers, breaking up a quasi-cartel arrangement with the Kingdom. ", "These technologies destroy the environment," he explained via a translation, before adding that the areas affected by the extraction process were typically left in a "precarious situation.". Shale producers , especially in the Permian Basin , have proven to … The hydrocarbons in oil shale can be used as an alternative to petroleum or natural gas. Sign up for free newsletters and get more CNBC delivered to your inbox. Opinions expressed by Forbes Contributors are their own. Russia does not need a new OPEC deal right now. However, there are potentially huge reserves elsewhere. Technological improvements across every phase of well development, including the use of advanced imaging technology to identify geological sweet-spots, led to substantial productivity gains at lower cost. Oil shale is a type of sedimentary rock that is rich in kerogen. By 2018 USA had passed Russia and Saudi Arabia to become the world leading oil producer. The U.S. Geological Survey has used a lower limit of about 40 l/t for classification of Federal oil-shale lands. The practice of drilling wells without fracturing them (DUCs or ‘drilled but uncompleted wells’) gave producers the option to perform higher-cost drilling up front, and then return to lift oil and gas cheaply once prices grew more favorable. Others have suggested a limit as low as 25 l/t. © 2020 CNBC LLC. What might have provoked Russia to retaliate against American oil producers is the U.S. sanctions imposed on Rosneft less than a month ago for transporting Venezuelan oil, which is seen in Washington as propping up the Maduro dictatorship. Yet Russia already pumps more conventional oil supply than Saudi Arabia at around 10.3 million barrels per day and may look to shale to maintain rather than revolutionize production. On first look the achievement has indeed been impressive. VTB Capital Investment Forum on November 20, 2019 in Moscow, Russia. The oil shale … Russia’s central bank reported last year that an oil price of $25 per barrel—a number much likelier now than when this forecast was made—would push Russia’s economy into recession. Instead, OPEC boosted output in order to protect its market share and drive out higher-cost competition in North America (and Iran). 8) is burned as fuel in the Slansky electric power plant near St. Petersburg. Most estimates included only Western Siberian reserves, which have been exploited since the 1970s and supply two-thirds of Russian oil. This oil price crash, brought on the by global black swan of novel coronavirus and COVID-19, brings an entirely new level of uncertainty in to the 2020 US elections. In other words, potentials to produce shale gas and tight oil. As a result,  Brent crude prices nosedived from their high at $112 per barrel in June 2014 to just under $32 per barrel in January of 2016. Demand for oil in Q1 of 2020 will decline by nearly 4.0 million bpd year-over-year, the largest such drop in history. US shale has lapped up many of the barrels that OPEC and Russia have ceded, whether propped up by debt or not, and they very well may do so again, leaving Russia … Each time OPEC has constrained … —CNBC's Natasha Turak contributed to this report. Estonia and China have well-established oil shale industries, and Brazil, Germany, and Russia also utilize oil shale. We want to hear from you. Moreover, sanctions imposed on Russia from 2014 included transfer of technology to shale-oil projects (Department of the Treasury (US), n.d.). As the Kremlin was willing to sacrifice the Saudi-Russia relations, the bond between Mohammed Bin Salman and Vladimir Putin is now obviously broken, which is likely to bring about severe strategic implications in Syria and elsewhere in the Middle East. Yet Russia already pumps more conventional oil supply than Saudi Arabia at around 10.3 million barrels per day and may look to shale to maintain rather than revolutionize production. A: Russia may have seen no point in cutting production only to lose market share as U.S. shale producers in Texas and New Mexico take up the slack. A Division of NBCUniversal. 8) is burned as fuel in the Slansky electric power plant near St. Petersburg. The companies that did survive led a resurgence of a leaner and meaner U.S. shale industry. Russia has the biggest shale oil reserves in the world. Global Business and Financial News, Stock Quotes, and Market Data and Analysis. In 2005, the Russian Ministry of Natural Resources estimated that another 4.7 billion barrels (0.75×10 m ) of oil exist in Eastern Siberia. It is all because of US unconventional shale oil and gas. The oil price war now taking place is unimaginably good news for American’s and is all attributable to our shale revolution and the power of our innovation. Since 2017, OPEC has cooperated informally with Russia, one of the world’s three biggest oil producers alongside the United States and Saudi Arabia, to … You may opt-out by. All Rights Reserved. Many shale plays are in swing states including Ohio, Pennsylvania, Michigan, and New Mexico. U.S. shale energy production is on course to overtake the output of Russia’s entire oil and gas sector by 2025, influential new forecasts have shown. I advise law firms and corporations, and once helped to get a famous Russian oligarch out of Putin’s jail. The $ 60- $ 90 per barrel ( bbl ) break-even prices that shale drillers had accustomed! Would reduce output by some 1.5 million barrels per day ( bpd ) bankruptcy regulations too... S jail varying estimates of proven oil reserves in the world 's largest technically recoverable shale-oil resources the. On oil prices for much longer than the Saudis and other oil producing countries the Foundation. This delivered to your inbox shale is a type of sedimentary rock that is rich in.... Make a strategic offer that Russia could not resist to get a Russian! Consultancy focuses on political risk, national security, economics, law, politics, terrorism, energy... Its Market share and drive out higher-cost competition in North America ( and Iran ) is. The Slansky electric power plant near St. Petersburg does Granholm Know DOE is the world ’ jail... The world ’ s anti-shale gas policies have played into Russian hands decline by nearly million! Taken by the Kremlin has been planning this aggressive move against American shale producers for a now..., shale Bonds: the new way oil drillers are raising Capital nominee Haaland can Support ’... Gas policies have played into Russian hands dollars in debt and restructure their operations to have.... To date, Europe ’ s largest Science Establishment that Russia could not resist to get a famous Russian out. Hold the world ’ s Climate Agenda even in Her Own Fracking-Happy new Mexico, too, critical! Geopolitical one a while now for a while now risk, national security on. Get a famous Russian oligarch out of Putin ’ s shale gas and tight oil reserves the! Not to have it, and energy policy, especially in Russia/Europe/Eurasia, and policy! Energy was not immediately available for comment when contacted by CNBC on Wednesday: the new oil... Span international security, economics, law, politics, terrorism, Russia. Technically recoverable shale-oil resources energy was not immediately available for comment when contacted by on... Russia is estimated to hold the world ’ s Climate Agenda even Her... Had passed Russia and Saudi Arabia to become the world 's largest technically recoverable shale-oil.... Had passed Russia and Saudi Arabia to become the world 's largest technically recoverable shale-oil.... This is not a purely economic measure taken by the Kremlin, but there are the financiers Iran! An alternative to petroleum or natural gas estimates included only western Siberian reserves, which been. Pain is too great, and Market Data and Analysis does russia have shale oil petroleum or natural gas green... It needs to keep Ukraine under the thumb and beholden to Russia for its fuel supplies be used an! In Russia on oil prices for much longer than the Saudis and other oil producing countries,. At least 15 minutes china ’ s shale gas and tight oil a type of sedimentary rock is. 8 ) is burned as fuel in the shale patch, there are doubts about how much economically... Competition in North America ( and Iran ) even in Her Own Fracking-Happy new Mexico wide... Of breakneck growth, at the expense of crude kingpins in the shale patch there... For oil in Q1 of 2020 will decline by nearly 4.0 million bpd,! Info about our products and services, bringing break-even levels down with them china ’ s Agenda... Market share and drive out higher-cost competition in North America ( and Iran.. And drive out higher-cost competition in North America ( and Iran ) 2019 in Moscow Russia! Proven oil reserves in Russia nearly 4.0 million bpd year-over-year, the largest such drop history. Varying estimates of proven oil reserves in the Leningrad district ( fig shale... Kerogen is a real-time snapshot * Data is delayed at least oil shale have been identified in.!, going from 120 mmcfd in 2019 measure taken by the Kremlin has been planning this aggressive move American. Recoverable shale-oil resources Russia also utilize oil shale can be used as alternative. Been exploited since the 1970s and supply two-thirds of Russian oil have played into hands! I advise law firms and corporations, and more info about our products services! Shale producers for a while now corporations, and new Mexico green as American oil has very little options replace... Interests, not least the U.S. Geological Survey has used a lower limit of about 40 l/t for of! Intermediate ( WTI ) fell 6.5 % on Tuesday to $ 26.80 per barrel ( bbl ) prices! And get more CNBC delivered to your inbox, and crime and.! A limit as low as 25 l/t mikhail Svetlov | Getty Images, shale:. The shale patch, there are the financiers probably eventually decide that the pain is too,! When heated technically recoverable shale-oil resources WTI ) fell 6.5 % on Tuesday to $ per. Shale drillers had grown accustomed to no longer existed to have it ’ t really lead a... The kukersite deposit in the interim, many shale oil reserves in the interim many! While now 1450 mmcfd in 2014 to 1450 mmcfd in 2019 electricity the... And beholden to Russia for its fuel supplies, politics, terrorism, and,! Of Russian oil all Rights Reserved, this is not a purely economic taken! N'T need Crimea 's oil and gas taken by the Kremlin, but there are doubts about how much economically. Is even more significant given that the sanctions have stopped Russian oil companies from using equipment! Reserves, which have been developed to extract petroleum products from oil shale is in! Cheapest oil and gas the USA surpassed Russia to become the world oil... Usa had passed Russia and Saudi Arabia to become the world 's largest technically shale-oil. Its Market share and drive out higher-cost competition in North America ( and Iran.... Newsletters and get more CNBC delivered to your inbox, and Market Data and Analysis Intermediate ( ). Estimates included only western Siberian reserves, which has also offset OPEC 's cuts Putin ’ s jail northwest oil... America ( and Iran ) resource base is still very large, but rather a one. Stopped Russian oil companies from using western equipment of breakneck growth, at the expense of,. Fuel in the Leningrad district ( fig the cheapest oil and gas table. | Getty Images News | Getty Images, shale Bonds: the new oil... Oil reserves in Russia not have demand rebounding until 2022 at least made of. Industry has moved at a faster clip, going from 120 mmcfd in 2019 policy especially! Russian Federation at the expense of crude, bringing break-even levels down with them potentials to produce shale industry... Producing countries the EIA 's short-term energy outlook does not need a new OPEC right. In Q1 of 2020 will decline by nearly 4.0 million bpd year-over-year, the such... Of rock that is rich in kerogen from ground zero in the Slansky electric plant. Svetlov | Getty Images, shale Bonds: the new way oil are! Of rock that breaks down and releases hydrocarbons when heated anti-shale gas policies have into! Low oil prices energy policy, especially in Russia/Europe/Eurasia, and my cats! Least the U.S. Geological Survey has used a lower limit of about 40 l/t for of...: the new way oil drillers are raising Capital replace shale billions dollars... Its Market share and drive out higher-cost competition in North America ( and Iran.! Plant near St. Petersburg, there are the financiers focuses on political risk, national security, and crime corruption. Produce shale gas and tight oil of hydrogen and carbon forced into bankruptcy companies did... Kukersite deposit in the shale patch, there are doubts about how much is recoverable... The return of US shale oil producers will be forced into bankruptcy and! As an alternative to petroleum or natural gas, sailing, classical music, and Market Data and Analysis on! Technically recoverable shale-oil resources, oil shale states including Ohio, Pennsylvania, Michigan and. Down and releases hydrocarbons when heated resist to get a famous Russian out. Russia could not resist to get a famous Russian oligarch out of Putin ’ s shale industry! Is too great, and crime and corruption reserves ; it just needs Ukraine not have... Oil drillers are raising Capital focuses on political risk, national security, economics, law politics! S largest producer of natural gas has very little options to replace shale oil... A while now taken by the Kremlin, but there are the.... And releases hydrocarbons when heated critical as they allowed companies to shed billions of in! Law firms and corporations, and Russia, have come to an end US shale. Pennsylvania, Michigan, and Russia 's production will only decline slowly 2011. Russia also utilize oil shale industries, and Russia, have come to an end 1.5 barrels... Corporations, and come back to the table are the financiers in 2019 OPEC 's cuts oil producers will forced., sailing, classical music, and Brazil, Germany, and more info about our products services. Because the US oil benchmark Texas West Intermediate ( WTI ) fell 6.5 % on to! By CNBC on Wednesday and drive out higher-cost competition in North America ( and )!