MOSCOW, Feb. 5 (UPI) -- The amount of money geared toward the exploration side of the Russian energy sector is expected to decline, a resource minister said Thursday.
Low oil prices and pressure from Western economic sanctions imposed in response to the Kremlin's stance on crises in Ukraine are diminishing government finances. Russian Natural Resources Minister Sergei Donskoy said government support for exploration may be 15 percent less than last year.
"The exploration funding from the state budget is exactly in question, rather than exploration expenditures of private companies," he said.
Analysis produced in 2011 by Ernst & Young finds the existing network of fields in Russia is such that there isn't a "pressing need" for extensive exploration programs. Russia is among the world leaders in oil and natural gas production.
The country may face problems with its future exploration efforts, however. There are no potential reserves on hand yet to offset the natural decline from maturing fields, the 2011 report found.
Lukoil, one of a handful of public oil companies in Russia, said in its own reporting the government needs to manage its long-term objectives carefully, otherwise production may decline as early as 2016.
A December report from the World Bank said Russia's economy is expected to contract by 0.7 percent in 2015. Low oil prices are expected to weigh on investment decisions and the industry itself should decline because of a steady decline in consumption.
