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The Russia oilfield services market size was USD 17.85 billion in 2022. The market is expected to grow from USD 19.04 billion in 2023 to USD 27.59 billion by 2030, exhibiting a CAGR of 5.4% during the forecast period.
The growth in the production & exploration of natural gas across Russia has steered the Russia oilfield services market growth. The surge in various industrial sectors such as automotive and power generation has propelled industrial enterprises and urbanization, making crude oil and shale gas a key development element. Oilfield services assist in the exploration, drilling, and production of oilfields and their processing and transportation.
Blockades in Global Oil Sales and Reduced Oil Price Harmed the Market Growth amid COVID-19
The global health emergency caused by COVID-19 impacted multiple industries. The industries have suffered significant uptime losses due to the imposition of strict rules such as nationwide lockdowns to reduce the impact and spread of virus. Accordingly, the outburst of the pandemic also changed the demand for oilfield services across Russia.
With the market heavily dependent on the oil and gas industry, the biggest slump in the oil & gas sector in a long time impacted investment in these services. Oversupply and low demand forced leading oil and gas companies to temporarily reduce their oil & shale gas production, ultimately causing volatility in prices. The aforementioned factors impacted the global oil and gas industry, and as a result, the Russia oilfield services market share witnessed a downward trend briefly.
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Increasing Exploration Activities to Explore Oilfield Discoveries in Russia Drive the Market Growth
Rosneft discovered an offshore gas field in the Arctic in the Vostochno-Prinovozemelsky-2 license area in the Kara Sea in December 2020. The field is said to have total reserves of 514 bcm of gas and 53 million tons of condensate.
According to the U.S. Geological Survey, the Arctic has an untapped potential of 90 billion barrels of oil and 47 trillion cubic meters of natural gas. The Russian zone of the ocean has the largest share of approximately 48 billion barrels of oil and 43 trillion cubic meters of natural gas.
Gazpromneft-Noyabrskneftegaz developed and deployed a new oil deposit search method called MAGIC in September 2019, which enhances efficiency while reducing exploration costs.
All these factors, put together, have given rise to Russia’s exploration activities to find new oil and gas fields. The rise in exploration activities and discoveries is anticipated to increase production activities in Russia, which will require oilfield services to combat the harsh environmental conditions and complex equipment requirements. This, in turn, poses an opportunity for the market in Russia.
Growing Investment in Offshore Oil and Gas Projects to Fuel the Demand for Oilfield Services in Russia
In January 2020, Vladimir Putin, President of Russia, announced USD 300 billion in stimulus for new oil and gas projects north of the Arctic Circle. Growing offshore oil and gas investments such as drilling, production, and exploration would increase demand for oilfield services. Pavel Zavalny, Chairman of the State Duma Energy Committee, stated that global demand for hydrocarbons will remain stable until at least 2040 and that Russia must do everything possible to keep production going.
Russia is likely to witness a massive surge in oil and gas production from offshore locations as the number of rigs increases, fueling the demand for oilfield-related services. The tough production conditions in the Arctic Circle due to the cold weather and ice at offshore locations require special services and equipment that involve high investment costs. The country's economic and climatic factors for offshore production are the major drivers for market growth during the projected period.
Growing Consumption of Petroleum Products and Liquid Fuels and Subsequent Investments in Petrochemical Sector to Drive the Market
In the May Short-Term Energy Outlook of 2022, the U.S. Energy Information Administration estimated that 2022 global consumption of petroleum and liquid fuels would be enhanced by 200,000 b/d from April 2022 of 99.6 million b/d, primarily a result of downward revisions to consumption growth in China and the U.S. Hence, Russia is looking to push into petrochemical amid uncertain global crude oil demand prospects.
Russia plans to take new measures to boost the development of the petrochemical industry, aiming to double production to around 20 million tons per year by 2030.
The market entry of ZapSibNefteKhim heralded the beginning of a rapid expansion in the Russian petrochemical industry. In addition, several projects already have the green light, including a 420,000-tonne-per-year ethylene plant in Novy Urengoy in western Siberia, which state-controlled gas company Gazprom commissioned in 2020.
Moreover, in March 2019, the Russian Ministry of Energy has approved a roadmap for the development of petrochemicals up to 2025 with an investment of USD 40 billion. Therefore, increase in the development of petrochemical infrastructure related to oil and gas exploration is expected to drive the Russian market over the forthcoming years.
Increasing Technological Advancements to Enhance the Oilfield Service Efficiency will Drive the Demand
The development of cloud computing or utility computing along with Artificial Intelligence (AI) has resulted in increased development of analytics software & services across oilfield-related services to increase efficiency, while reducing costs, which will boost demand in Russia.
This software can efficiently study the underground geology to understand the location of underground deposits. Technological advances also help in developing digital oilfields that combine enterprises process management with digital technology to automate workflows, maximize productivity, reduce costs, and minimize the risks associated with operations in oil & gas. One recent development with this context occurred in April 2021, where Wintershall Dea, Gazprom, and OMV have developed a new procedure to produce gas from Turonian establishment, which will sustain production of plateau deriving out of Yuzhno-Russkoye field.
In July 2019, the Far Eastern Federal University and Anchar Company suggested using an innovative technology of acoustic low-frequency oil and gas exploration for exploring Arctic fields in the Arctic by capturing ultrasonic sound signals using sensors and a special station capable of operating under the ice.
Sanctions Against Russia Due to the Ongoing Russia-Ukraine War to Hamper Market Growth
In February 2022, Russia invaded Ukraine by land, air, and sea. Criticizing this attack, the western nations have imposed sanctions on Russia due to the ongoing Russia-Ukraine war.
The European Union announced sanctions against imports of Russian oil brought in by sea from December 2022. The European Union announced the ban on all imports of refined oil products from Russia in February 2023. The U.S. banned all Russian oil and gas imports. The U.K. planned to phase out Russian oil by the end of 2022, and it no longer imports Russian gas. Germany announced that it had frozen plans to open the Nordstream 2 gas pipeline from Russia.
Furthermore, the EU has stopped importing Russian coal. From December 2022, the EU and G7 also plan to cap the price countries pay for Russian oil. The European Union has not yet imposed sanctions on Russian gas as it relies on it for about 40% of its gas needs.
These sanctions have led to oil and gas price fluctuations globally. Moreover, the reduced demand for Russian oil & gas in western countries is bound to have a long-lasting impact on this industry in the country. Nevertheless, the continued export of Russian oil & gas to Asian countries has minimized the restraining impact on the market.
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Owing to Maximum Utilization of Services, Field Operations Segment Holds a Significant Share of the Market
By type, the market is segmented into equipment rental, field operations, and analytical services. The services and equipment explicitly required during the maintenance and operation of oilfields are categorized under field operation. Field operations segment holds the maximum share owing to the increased number of services and increase in drilling activities. The country’s augmented exploration activities resulted in Russia locating more oilfields. The rig's production activities and the rig count have increased in the past few years. This has amplified the market share of the field operations segment.
To get any oilfield project started, oilfield construction is required, which needs precise, specific, and reliable equipment. Companies prefer this costly equipment to rent, known as equipment rental. The equipment rental segment has the second-highest market share due to increased drilling operations. Due to technological advancement, these services employ software and cloud-based analytic software, known as analytical services. The increasing reliance of oil and gas industries on information technology and cloud services makes analytical services the fastest-growing segment.
Rising Production Activities will Drive the Production Segment Growth
Based on service, the market can be divided into geophysical, drilling, completion & workover, production, and processing & separation. Real oil and gas production from oilfields involves equipment and services such as artificial lifts, support vessels, Floating Production Vessels (FPSO), well testing, enhanced oil recovery, digital oilfields, subsea equipment, and many others. Most of the services are employed in the production sector due to increasing production activities from new and old oilfields.
Drilling for exploration and production is important in acquiring crude from oil & gas fields. New technologies, such as directional drilling, horizontal drilling, logging while drilling, managed pressure drilling, and others, make up this service segment. The drilling segment holds the second-highest market share. Completion & workover segment involves well development, repair, and maintenance activities like well intervention, sand control, mud logging, completion fluid, hydraulic fracturing, wireline logging, and others.
Processing & separation segment involves refining, separating various fuel grades, and removing impurities for further use. The technologies, services, and equipment used by the oil and gas industry to acquire seismic data, processing, interpretation, equipment manufacturing, borehole seismic, reservoir geophysics, micro-seismic, and software R&D are included in geophysical prospecting. With growing investments in offshore exploration, the geophysical segment is anticipated to grow at the fastest rate.
Onshore Segment to Maintain a Higher Share due to Growing Onshore Processing Activities
Based on application, the market is divided into onshore and offshore. The onshore segment, which involves services for oil and gas activities in onshore locations, accounts for the maximum market share due to the growing requirement for production, separation, and processing services for onshore oilfields. Offshore services include activities on fields in open ocean waters or along coastlines. Offshore services vary based on the depth of the oilfield, such as shallow water, deep water, and ultra-deepwater, which require specific services for different depths. The offshore segment is growing at a high rate owing to the growing investments in exploration and drilling activities in an offshore application.
Increased oilfield discoveries and growing investments in offshore exploration and production in the north of the Arctic are major factors driving the market growth. Growing investment in the oil, gas, and petrochemical industry, coupled with technological advancements in the field, has propelled the growth of the Russian market. Despite the economic slowdown due to COVID-19 and the Russia-Ukraine war, Russia has increased investments in the Arctic offshore and pipeline infrastructure. Russia has the longest pipelines globally to enable oil and gas transportation.
The 4,196 km Yamal-Europe pipeline connects Western Siberia in Russia to Austria. The oil and gas carrying Druzhba pipeline from the eastern part of Russia to Germany is the world's longest oil pipeline and one of the world's most extensive oil pipeline networks. The increase in transportation services has directly boosted the market. There have been substantial drilling cuts in the region in the past few years. However, the government’s increased inclination to exploration activities has helped investment in the market in the country.
Rosneft-Burenie, Gazprom Bureniye LLC, and Surgutneftegas are Expected to Lead with Investments in Oilfield Equipment
A study of the competitive landscape of oilfield services shows that very few have enough rig fleets and equipment of global standards. Most oilfield service companies are increasing investments in international standards of quality equipment and specialized equipment for harsh weather conditions. The market has seen various technological advancements coming up to keep pace with the top-performing service providers.
An Infographic Representation of Russia Oilfield Services Market
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The research report highlights Russia to offer a better understanding of the customer. Additionally, the report provides an understanding of the latest Russian oilfield services market trends and examines technologies being set up rapidly globally. It further elucidates some growth-stimulating factors and restraints, helping the reader gain in-depth knowledge about the industry.
CAGR of 5.4% from 2023 to 2030
Value (USD Billion)
By Type, Service, and Application
Fortune Business Insights says that the market size was USD 17.85 billion in 2022 and is projected to reach USD 27.59 billion by 2030.
The market is likely to grow at a CAGR of 5.4% over the forecast period (2023-2030).
The field operations segment is anticipated to dominate this market during the forecast period.
New oilfield discoveries in Russia is the key factor driving the market.
Rosneft-Burenie, Surgutneftegas, and Gazprom Bureniye LLC are some of the key participants in this market.
Government incentives for new oil and gas projects north of the Arctic Circle are likely to propel investments in offshore oil and gas activities, such as drilling, production, and exploration, which would accelerate the service demand in Russia.
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