Russia is in the process of experiencing a second year of record oil drilling in 2023. To what extent does this seem like a new proof of the failure of Western sanctions?

Russia has the largest gas reserves on the planet and has very large oil and coal reserves. Russia has long been one of the world's leading producers of crude oil (with Saudi Arabia and now the United States, the leading producers). It is also the second largest producer of natural gas, after the United States.

Oil and gas production in Russia has always played a key role in the country's economy. Revenue from the hydrocarbon sector accounts for almost 50% of the state budget. Oil production peaked in 1986 and the high prices of the early 1980s allowed the USSR to survive, but the collapse of the crude oil price in 1986 - from $28 to $10 per barrel - dried up the Union's finances, The fall of the Soviet Union in 1991 is largely attributed to this collapse of oil revenues.

Oil production fell sharply after the fall of the USSR before returning to a level close to 10 Mbj (Million barrels per day), which has remained relatively constant since 2000. Western sanctions have not had an effect on production, which has remained stable since February 2022, when Ukraine was invaded.

What were the objectives of the US and European sanctions?

As far as natural gas is concerned, a significant part of Russian production was exported to the European Union, which itself depended for 30 to 40% on Russia's needs (150 to 200 billion cubic metres per year imported from Russia for a consumption of around 500 billion). To put pressure on the Westerns Russia has gradually reduced the volume of its exports, which have been reduced by 90%. The bulk of its exports went to Ukraine and the Nordstream pipeline, which went directly from Russia to Germany but was sabotaged in September 2022 and is out of use.

Westerners launched several sets of sanctions against Russia in the hope that these sanctions would weaken the Russian economy and thus reduce the action of Russian armies in Ukraine. The most important sanctions were the ban on the use of banking facilities, the cessation of imports of Russian crude oil into Europe, the ban on Western companies from intervening or supplying technology to Russia. The last sanction was to cap the price of Russian crude oil (at $60 per barrel, well below the world price) on the fact that the transport and insurance of Russian crude oil shipments was often carried out with the help of Western insurance and transport companies, so easy to control

At the beginning of 2024 it must be noted that these sanctions were largely ineffective. Russia redirected the shipments of crude oil that it was sending to Europe to China, to India and to a few African countries, all very happy to benefit from access to a crude oil that Russia had to sell with a discount, whether sanctions or not. In order to escape the capping of the price of crude oil, Russia has bought an impressive number of vessels that are more or less obsolete but that escape Western sanctions.

In the field of gas gas exports to Europe, which accounted for the majority of natural gas exports, could not be compensated even if Russia increased its sales to Asia because it needed expensive and long pipes to build. But gas sales represent much less than oil sales.

Why does Russia strive to pursue drilling frantically while production remains low?

Gas production was affected by the cessation of gas exports to Europe, which accounted for almost a quarter of Russian production. As a result, Russian production fell from around 10 to 15 per cent. This fall particularly affects Gazprom, which was the operator of gas exports to Europe.

Conversely, oil production has not been affected and remains stable. The ageing of fields and the need to maintain production to guarantee the necessary revenues for the Russian budget and the continuation of the war in Ukraine explain this acceleration of drilling.

How do you judge Russia's energy situation? Is it completely independent in its oil services?

Russia's energy situation remains quite satisfactory. The very large reserves of gas, oil and coal allow Russia to be the third largest producer of energy in the world after China and the United States but with a much smaller population. Russia therefore has very large amounts of energy to feed its industry, domestic market and ... its armies.

The abundance of resources allows Russia to export massive quantities of oil but also coal and, now to a lesser extent, natural gas. The revenues from these exports are fundamental to the Russian economy.

Western sanctions did not have a significant effect. The only problem for Russia is stopping gas exports to Europe, but it is not due to sanctions. The sanctions could even lead to Russia developing its own technology to replace Western technologies that are now inaccessible. The example of the liquefied natural gas industry is interesting: construction projects are delayed but could be created with Russian technology.