Against the background 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 states with a raw material type of economy, and its well-being is directly related to the cost of black gold in the international market. It is problematic to unequivocally answer the question regarding how much Russian oil is worth, as the concept belongs to the category of multi-valued ones. The situation is complicated by 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 also a category of raw materials that is not used and not exported, but is used exclusively in the chemical industry.
What are the costs of oil development included in its cost?
The cost of Russian oil includes industrial costs. These are the costs of raising the wellbore fluid from the bottom to the mouth by the operator, the cost of water that is sent to the reservoir to maintain pressure, funds for electrical energy and consumables. We must not lose sight of the wages of workers. The cost of depreciation of equipment used in the extraction of raw materials is taken into account. In the calculations, we pay attention to the fact that when mining raw materials, not all wells at the facility are involved in the process. Some of them may be under repair. Difficulties are caused by the fact that the expense of servicing equipment at different time periods (day, month, year, etc.) can differ significantly, which will directly affect the cost of production. It is the numerous number of factors that form the final cost of black gold that stimulates 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, if you do not take into account taxes and mineral extraction tax, has tripled from 2005 to 2014, from 1, 000 to 3, 000 rubles. As for export, its price also increased. Previously, it corresponded to 600 rubles, and today it is 1800 rubles. In accordance with the trend, the MET itself has significantly increased, which acts both as a reflection of the cost of oil and as a reflection of the dollar. As for the estimated cost of production of raw materials in dollars, in the described period (2005–2014), it also increased. If earlier experts estimated the 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 exploring new deposits and general investments in the industry have been included in the cost of black gold. Russian oil reserves, explored during the Soviet era, have exhausted themselves, and you have to look for new mineral deposits, which is not cheap. They began to take into account the operational costs of companies.
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 carry out a number of calculations. Thus, it was possible to find out that the cost of raw materials by 55–57% consists of various taxes and fees that the company pays to the state. This suggests that most of the money from each barrel of oil sold is spent on the severance tax, customs duties, and income tax, plus specialized contributions for company employees (personal income tax and social insurance).
Detailed percentage of pricing factors
Consider where the profit from the sale of oil by Rosneft goes:
- 10% of the price covers the costs of developing and exploring new deposits, spending on installation and installation of equipment, on finding buyers and signing contracts, on administration and ensuring business safety;
- 8.4% of the price covers the delivery of raw materials to customers, whether they are final consumers or not;
- 7.6% is the depreciation and depreciation of tangible assets (buildings and structures, oil pipelines and equipment, etc.);
- 8.6% is the payment for the services of auxiliary companies, in particular for the repair of equipment or for the processing of fuel.
Operating profit accounts for only 13.2%. And from it is also calculated net interest expense and net profit from non-operating activities. The balance is subject to correction for exchange rate dynamics 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 made attempts to calculate the approximate cost of Russian oil production, as mentioned earlier, examined Rosneft. They managed to find out that the company divides all its expenses into three categories. It:
- production and operating expenses;
- general and administrative;
- Expenses related to the exploration of oil and gas reserves.
Reports indicate that the company's internal expenses account for 17.5% of the company's revenue. External costs - this is an additional 17% of profit. Thus, oil production and its delivery cost the company no more than $ 35, but provided that the cost of fuel in the market corresponds to $ 100. If expenses can be optimized by reducing duplicate posts and reducing salaries with bonuses, as well as in the case of increasing the depreciation period of equipment, it turns out to reach a cost of 25–27 dollars. This suggests that when the dollar grows, oil falls in price, but not the oil companies, but the state, which receives taxes from the full cycle of the sale of oil products in excess of the cost of fuel, is losing.
What prices on the world market can the Russian oil industry withstand?
Oil and the Russian economy are tightly linked, and the catastrophic decline in the cost of raw materials, at first glance, should scare many domestic companies. According to information from official sources, during the holiday trading on the world oil market (January 7, 2015), the WITI brand was trading at a multi-year low, at $ 47.33. North Sea Brent oil did not fall below $ 50.77. Experts studying the markets for the sale of resources such 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 Regnum analytical agency, the breakeven level of almost all domestic oil companies is at $ 30. Dry oil production, without accompanying costs, costs companies $ 4 to $ 8. Despite deductions to oil companies about 70% of profits to the state treasury, the industry has a fairly large supply of capacity. The Russian Ministry of Energy plans to maintain fuel production at around 525 million tons, despite tough Western sanctions and limited access to both lending and innovative offshore development technologies.
Profitability of oil production in Russia
The profitability of oil production in Russia is quite high, and, as it was found out, the industry will withstand the load when the cost of fuel drops to $ 30. Today, Urals trade is at the level of 61.77 dollars. The fall will only hit the state budget of the country. If the 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, oil workers, in connection with the economic situation in the country and because the dollar is growing, are trying to extract oil with minimal expenses. They stop investing in their companies, stop updating funds, stop geological exploration and maximize the depreciation of equipment. The forecast promises an increase in fuel prices in the near future, the emergence of available funds and compensation for temporarily blocked cost items. If low prices in the oil market will be kept for a very long time, not only the oil workers themselves will have to face problems, but also the state as such. Despite how much oil is in Russia, its fields need to be developed, since already developed projects are depleted over time. The industry may face collapse if the percentage of hard-to-recover oil rises. Today it makes up 70% of the total production. As a result, the cost of raw materials will increase, which will make work in the industry almost unprofitable.
Only surplus for import
Despite the fact that active Russian oil fields provide a low prime cost of the latter, one should not forget that only surplus is exported, the amount of oil products that the state cannot consume. With a decrease in production, there will be nothing to export. It is likely that the Russian Federation will quickly be retrained from an exporter to an importer. As a result, Russian oil for rubles will be available only domestically, and the cost of fuel will be set by the state itself, without focusing on world markets. A similar situation is in China, which, being the fourth country in the world in terms of oil production, is forced to buy fuel. The situation turned upside down in 2004. Indonesia, just recently a member of OPEC, is now actively purchasing raw materials. We can also mention Romania, which until recently supplied Europe with black gold and which now itself buys fuel in Kazakhstan and in Russia.
The situation in the domestic oil market
Having dealt 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 market in the field of oilfield services is occupied by four western companies. These are Schlumberger and Baker Hughes, Weatherford and Halliburton, the latter today actively absorbing Baker Hughes. The activities of enterprises are strictly regulated by the sanctions imposed by America on Russia. There is a high probability that the participation of companies in the development of the Russian industry is completely discontinued, but there is no official confirmation of this fact. Russia's oil industry is highly dependent on imports. For example, work on the Arctic shelf without the participation of US specialists 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 studies according to the available information were carried out by foreign specialists with the support of structures affiliated with them. The termination of partnership with America promises large losses in the volume of oil produced and a sharp increase in its cost. Of course, this is just one of the theories of the likely development of events that can either be accepted or not taken for the truth.
