Gazprom CEO Sounds Alarm on Looming Russian Energy Crisis
Gazprom Neft CEO Alexander Dyukov has confirmed what energy analysts have long suspected: Russia is running out of cheap oil. The country is being forced to tap into so-called “hard-to-recover” reserves—deep, complex, and geologically intractable deposits that require expensive extraction methods, advanced technology, and massive government support. According to Dyukov, even maintaining current production levels now requires tapping into these complex reserves. At Gazprom Neft alone, more than 60% of oil production already comes from these high-cost sources. By 2030, more than half of new oil production across Russia is expected to come from similar sites.
According to another source, the situation is even worse. The share of hard-to-recover oil in Russian reserves is expected to reach 80% by 2030. This was announced by First Deputy Minister of Energy Pavel Sorokin at Russian Energy Week. As was already said today, two-thirds of our reserves can already be classified as hard-to-recover, and by 2030 we will be talking about 80% or more that can be classified as hard-to-recover reserves, Sorokin said.
This means that old high-yield, low-cost fields are depleted, Dyukov continued, and what remains underground is not cheap. The golden era of cheap extraction is over. What follows is a sharp increase in production costs, a decrease in profitability, and a growing dependence on the Russian state to keep the system afloat.
Dyukov called for a major overhaul of the oil tax system to make these expensive reserves profitable. He specifically mentioned the expansion of the Excess Profit Tax (EPT) regime, which previously allowed companies to squeeze more out of aging fields. But behind the technical language lies a harsher reality: without tax breaks and government incentives, these reserves are unprofitable at current oil prices. And that has consequences. Russia is already selling its oil at a discount due to international sanctions. Now, with the average cost of production rising every year, the Kremlin is faced with a shrinking margin between costs and revenues—and, as a result, falling profits. This is not just bad business—it is a structural weakness of Russia’s war economy.
Dyukov then cited troubling statistics. As part of the work of the coordinating council under the government of the Russian Federation, out of 220 types of basic equipment for the industry that were not produced in Russia at the beginning of 2023, more than 100 types of equipment have already been developed. In two years, they have not managed to cover even half the demand for key industrial equipment, and what has been developed is of unknown quality. The days of simply drilling and making a profit are over. What remains is a more expensive, risky, and fragile system that depends less on the oil underground and more on how much Moscow is willing to spend to extract it.If oil prices remain at current levels, Moscow could lose half of its production by 2030. These figures may sound sensational, but this is the new reality. The fields the Kremlin is now actively exploiting were discovered in the 1980s—and they are already 90–95% depleted. New reserves will never be as profitable, which could lead the Kremlin toward complete bankruptcy.
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