The cost of oil reserves in Russia at the end of 2019 decreased by 17% – to 12.7 trillion rubles, the Ministry of Natural Resources of the Russian Federation estimates. “The overall decline in the cost of mineral reserves amounted to 10 trillion rubles, which is primarily caused by a decrease in the estimate of the cost of oil reserves, which make up 80% of the total estimate of all minerals,” the ministry said in a statement.
The total forecasted oil production at the end of 2019 decreased by 43.8 million tons (-0.4%) compared to 2018.
The reason for the change over the year is that operating expenses increased by 7% and capital expenditures by 7.2%. At the same time, the average oil price decreased by 2.2%, while the discounted net cash flow decreased by 4.9%.
The above factors are explained by the fact that in the reports submitted by subsoil users from year to year, there are significant adjustments to the forecast values in the economic part (especially in operating costs and capital expenditures). In addition, the redistribution of loads by forecast years (transfer of values from early periods to later ones and vice versa) significantly affects the final result due to the use of discounting.
The total forecast volume of iron ore mining at the end of 2019 compared to 2018 decreased by 656.8 million tons (16.8%). The decrease in the value of iron ore reserves in the reporting year amounted to 214.9 billion rubles (-17.3%).
The key reasons for the decline in forecast production and the value of reserves are the revaluation of reserves, as well as a decrease in the average realized price.
The total forecasted production of coking and power coal at the end of 2019 increased by 132.8 million tons (5%) compared to production at the beginning of 2019. The decrease in the cost of coking and power coal reserves in the reporting year amounted to 543 billion rubles (-29.4%).
The reasons for the decrease in the cost of inventories are a decrease in the average selling price (and, accordingly, sales proceeds), as well as an increase in operating (operating) costs. The increase in the total volume of production for coking and power coal by 132.8 million tons (5%) was caused by a large number of reporting companies in 2019 compared to the previous reporting period, explains the Ministry of Natural Resources.