Russia’s proven oil reserves stand at approximately 13.2 billion tons, supporting about 25 years of production. However, depleted fields, infrastructural sabotage, and international sanctions are rapidly undermining the country’s vital energy sector amid ongoing conflict and economic challenges.
Ukraine’s Foreign Intelligence Service has revealed that Russia’s economically viable, proven oil reserves stand at about 13.2 billion tons, sufficient for approximately 25 years of production. This figure highlights the country’s substantial but finite oil wealth amid ongoing conflict and global market pressures. Russia’s oil and gas sector generates a significant portion of its federal budget—around 77.7% in 2025—and remains a critical revenue stream that supports its military activities, particularly the war against Ukraine.
Despite the continued importance of oil revenues to the Russian state, underlying challenges cast doubt on the long-term sustainability of this energy-dependent economy. The intelligence report found that 96% of Russia’s subsoil fund has already been allocated, signalling near-exhaustion of accessible oil fields. This suggests that further exploration potential is limited, and over the next decade or so, Russia’s prospects for expanding production will diminish.
Investor interest in Russian oil and gas has sharply declined. Data from 2024 auctions indicate that one-time payments for hydrocarbon extraction rights reached only $50 million—a modest sum, particularly when compared to revenues from less significant sectors like placer gold mining. This drop reflects increasing wariness among investors, who are deterred by sanctions, geopolitical risks, and technological constraints.
Technological challenges compound the issue. Russia’s oil extraction capabilities are approaching physical and financial limits, with many reserves located in geologically complex, remote, or otherwise hard-to-reach areas. Restrictions on funding and advanced technology further hamper development efforts, undermining energy and economic security over the long term.
In addition to production challenges, Russia’s refining infrastructure has taken a severe hit. Ukraine has reportedly disabled 17% of Russia’s oil refining capacity through a series of drone strikes targeting key facilities over the past month. These strikes have significantly disrupted fuel processing, triggered gasoline shortages, and struck at the economic foundations of Moscow’s war effort. This impact is amplified by international efforts, notably from Washington, to mediate peace while pressurising Russia’s energy sector.
Economic data from Russia throughout 2025 presents a somewhat volatile picture but underscores the prevailing downward trend in oil and gas revenues. Early in the year, January saw a 16.9% increase year-on-year in oil and gas revenues, driven by higher extraction taxes. However, by March, revenues declined by 17%, affected by forced discounts on Russian oil, intensified US sanctions, and a strengthening ruble—factors that substantially reduced federal income from the sector. The Ministry of Finance responded by revising down its annual revenue forecast from 10.94 trillion rubles to 8.32 trillion rubles for 2025.
The downward pressure on revenues intensified as the year progressed. In July, oil and gas tax revenues plunged by 28% year-on-year to 787.3 billion rubles ($9.84 billion), marking the third consecutive month of decline. Over the first seven months of 2025, these revenues dropped 19% year-on-year. This trajectory reflects weaker global oil prices combined with a stronger ruble, both of which erode the sector’s income when converted back to the domestic currency.
International trade patterns further reveal that while European markets have largely distanced themselves from Russian oil due to sanctions, Asian countries remain the primary buyers, maintaining a crucial—but shrinking—demand base. This shift has complicated Russia’s export landscape and heightens the strategic importance of its relationships with Asian nations.
Overall, the evidence points to a Russian oil and gas sector confronting a multi-layered crisis: depletion of existing reserves, declining investor enthusiasm, infrastructural sabotage, and adverse international market conditions. These factors collectively threaten the long-term stability of an industry that is pivotal to Russia’s economic health and military ambitions. The confluence of internal and external pressures paints a challenging outlook for the Kremlin as it navigates dwindling resource potential and intensifying geopolitical isolation.
Source: Noah Wire Services
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