Russia’s Ministry of Economic Development projects the country’s oil industry faces irreversible decline even if sanctions end tomorrow, Ukraine’s Foreign Intelligence Service analysis concludes.
Ukrainian intelligence reported on 29 September that Moscow’s updated economic forecasts show Russian officials expect Urals crude prices to rise from $58 per barrel in 2025 to $65 by 2028—but only if Russia escapes international isolation.
The ministry’s worst-case scenario projects production dropping over 20% by 2030 to roughly 8 million barrels daily, according to analysis by OilPrice.com.
The admission matters because oil and gas revenues fund roughly 30% of Russia’s federal budget—the war chest keeping Putin’s invasion of Ukraine running. Moscow’s own economists now concede Western sanctions are systematically dismantling this foundation.
Why the technology gap became permanent
Russia’s problems run deeper than market access. The country needs Western drilling technology to exploit its vast shale reserves—the same horizontal drilling, AI-powered reservoir imaging, and high-pressure fracturing equipment that fueled America’s energy revolution.
“Getting oil out of the ground is harder and more expensive, but the deteriorating resource base means you have to run faster every year just to stay in place,” said Matthew Sagers, Russia expert at S&P Global Commodity Insights.
“It’s essentially a long, slow goodbye for Russian oil.”
US and EU sanctions are blocking Russia from critical equipment: tools that measure rock formations in real-time, advanced positioning systems, and industrial pumps powerful enough to fracture shale hundreds of meters underground.
Russia’s aging fields in Western Siberia and the Volga-Urals region are depleting, forcing companies toward shale reserves that require the now-banned tech.
Even the software has become unusable. Analysts say AI programs for reservoir imaging—essential for plotting three-mile horizontal wells—can’t be updated, rendering them worthless.
Russia lacks the trained crews to operate this equipment anyway. The war diverts potential oil workers to frontlines, with monthly casualties creating permanent labor shortages.
Ukrainian strikes accelerated what sanctions started
Ukraine’s campaign against Russian oil infrastructure destroyed what sanctions couldn’t block. Ukrainian forces knocked out around 20% of Russia’s refining capacity, forcing Moscow to export low-margin crude instead of profitable refined products.
This triggered fuel shortages across Russian regions and forced the Kremlin to extend export bans on diesel and gasoline—a quiet admission that domestic supply can’t meet demand.
Natural gas faces identical constraints
Still, Russia projects liquefied natural gas exports will grow from 34.6 million tons in 2024 to 58.4 million tons by 2028, according to the ministry forecasts analyzed by Ukrainian intelligence. Yet this optimistic projection is impossible without Western technology.
Key projects, including Arctic LNG 2, remain under US sanctions without access to essential equipment.
The ministry also forecasts petroleum product exports rising from 122.5 million tons to 134 million tons by 2028—another target requiring Western refining equipment prohibited since 2022.
No quick fixes
Russia’s window for revival is closing not because of one factor, but because sanctions, Ukrainian strikes, aging fields, and missing technology create compounding problems.
Even massive capital investment can’t solve what takes years to rebuild.
The Russian forecasts show Moscow’s economists understand this. Their baseline scenario assumes sanctions relief—and still projects years of decline before any recovery. The worst-case scenario, where isolation continues, shows Russian oil production potentially falling to levels not seen since the 1990s collapse.
Oil revenues, which have funded 30% of Russia’s federal budget, are disappearing regardless of Western policy choices. The question isn’t whether Russia’s oil sector collapses, but how fast.