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. Last Updated: 07/27/2016

Oil and Gas Reserves Shrinking

The country's oil reserves shrank by 7.3 billion barrels from 1994 to 2005 as the country failed to replace dwindling West Siberian reserves with new discoveries in East Siberia and other regions, an official said Friday.

"The proportion of reserves that can be extracted has fallen from 42 percent at the start of the 1990s to 27 percent," Sergei Fyodorov, head of subsoil policy at the Natural Resources Ministry, told a conference.

Russia's energy reserves are classified information, but BP's statistical review of world energy has put them at 74.4 billion barrels.

"At the current rate of growth in oil production, there won't be enough reserves to keep up," Fyodorov said.

Gas reserves were down by 2.4 trillion cubic meters over the same period, he said. BP figures put Russia's natural gas reserves at 47.8 trillion cubic meters in 2005.

When the Yamburg and Medvezhye fields are fully depleted, 1 trillion cubic meters of gas will remain untapped, Fyodorov said. The fields are some of the biggest of Gazprom's.

Industry experts say that in Soviet times, state-run oil producers rushed to pump as much oil from each field as possible, damaging the chances of making the most of the available reserves in the long term. Many fields that were harvested hastily now produce much more water than oil.

The government is working on a new law that will encourage more rational extraction and has already brought in tax breaks for firms that tackle oil fields with hard-to-reach reserves.

Such projects are feasible with advanced oil recovery techniques, with costly technology that can help eke the last drops out of an otherwise defunct oil field.

But Fyodorov said officials should resist the knee-jerk response of withdrawing operating licenses from companies that fail to meet production targets specified in their license terms.

"The withdrawal of licenses should happen only in extreme circumstances. At other times, people who break the rules on getting energy resources from the ground should be fined," he said.