The Russian Oil Services Market May Grow by 7% in 2026
Between 2021 and 2025, the oil services market grew at an average rate of 13% per year, with approximately two-thirds of this growth attributed to inflation rather than an expansion of work volumes, the report indicates. By 2028, the growth rate is expected to slow to around 8% per annum.
Oil and condensate production in Russia is expected to plateau at 510–520 million tonnes in the coming years, though maintaining this level is becoming increasingly resource-intensive.
From 2021 to 2025, drilling activity increased by 11%, while the number of employees in the industry rose by 16%, even as production decreased by 2%.
The financial state of contractors is putting pressure on the industry. According to the report, 39% of market revenue in the oil services sector was at risk in 2025, up from 27% in 2021—companies have not increased debt, but the cost of servicing that debt has gone up. Operators' investments in production have for the first time exceeded available cash flow by 20%, with 93% of CAPEX going to contractors compared to 76% in 2021, analysts note. The wear and tear of drilling rigs has reached 55%, and their numbers have not increased in several years.
“The price of oil has not increased for the operator—it has increased for the contractor. To maintain production at a plateau, the market is increasing work volumes and manpower, while the margin is currently absorbing the difference,” explains Dmitry Kasatkin, Managing Partner at Kasatkin Consulting.
According to Kasatkin Consulting, the market structure by segment has not changed significantly over time.
Independent services account for 46%, while players associated with vertically integrated oil companies (VINC) contribute 49%, with 5% attributed to international firms. Analysts identify drilling support, cementing, drilling fluids, and mechanised production as the most rapidly growing and profitable segments, while services related to geological exploration are seen as the least profitable. Oil service companies did not provide comments.
Senior Analyst for the oil and gas and transportation sector at Euler, Andrei Polishchuk, believes the market will primarily grow due to volume increases as OPEC+ quotas are relaxed—this, in his estimation, will boost drilling and demand for other services provided by service companies. Sergey Tereshkin, CEO of Open Oil Market, notes that according to the US Energy Information Administration (EIA), oil production in Russia declined from 9.2 million barrels per day (b/d) in January to 8.85 million b/d in July, while the International Energy Agency (IEA) reports a drop from 9.26 million b/d to 8.76 million b/d. Companies, the expert explains, are increasingly maintaining production levels without drilling new wells. However, Mr. Tereshkin adds, there is potential for growth—actual production in Russia is more than 1 million b/d below the OPEC+ quota, but realising this potential depends on how secure shipping in the Black Sea will be. As reported by S&P Global, in August, Russian oil shipments through Black Sea ports fell more than twofold from July, to 380.3 thousand b/d, and total maritime exports decreased by 12%, to 3.83 million b/d (see “Ъ” from September 5).
Dmitry Prokofyev, Director of External Communications at NEFT Research, states that the need to increase investments in exploration and production, including a shift towards more complex and costly technologies, creates persistent demand for service offerings. However, the continued dominance of price factors signals limitations on the physical growth of the market. According to the expert, high debt burdens, expensive credit, and declining profits even with revenue growth (see “Ъ” from May 7), along with technological dependence on imports, are systemic issues facing the industry. In this environment, those who can manage debts and invest in technologies are likely to gain an advantage, Mr. Prokofyev believes.
Source: Kommersant
