Problems of russian oil and gas service market

Regional and branch economy

The Russian market of oilfield service companies must perform the function of redirecting the oil and gas industry from its focus on export of raw materials to orientation towards science and technologies. There were objective prerequisites for transition of oilfield service companies to a competitive market after the crisis of 2008 – 2009. However, this mechanism has not yet been implemented. In recent years, the volume of the Russian oilfield service market has increased significantly, but the market share belonging to Russian companies has declined. Most of the orders in the oilfield service market are carried out by foreign companies, which perform the most high-tech and highly paid services. Russian oilfield service companies have to compete in the segment of low-tech and low-margin services. This has a negative impact on their financial situation, as well as on the possibility of investing in new technologies. The goal of the study is to identify the main problems of the domestic oilfield service market. The subject of the study are the transformation processes of the Russian segment of oilfield services in the context of forming an independent market for oil and gas services. Empirical analysis using the reports of consulting companies was chosen as the basis of the study. In this paper, we have analyzed the main trends in the market of oil and gas services in 2013–2018. The key problems that hinder the development of the oilfield service market in Russia are presented, such as the low profitability of the sector, the practice of deferring payments for services from VIOC, deterioration of basic production assets, and lack of government regulation. We have substantiated the reasons for the decline in the market share of domestic oilfield service companies in favor of competing foreign oilfield service companies. As a result, system state regulation is absent in the market of oil and gas services. The development of independent oilfield services in Russia should be stimulated by forming technological partnerships between corporate, scientific and state structures which support innovative projects.