The Russian Oil Service Market May Grow by 7% in 2026
Between 2021 and 2025, the oil service market grew at an average rate of 13% per year, with inflation contributing to about two-thirds of that growth rather than an expansion in work volumes, the report states. By 2028, the growth rate is expected to slow to approximately 8% annually.
Oil and condensate production in Russia is projected to remain at a plateau of 510–520 million tons in the coming years, making its maintenance increasingly resource-intensive.
From 2021 to 2025, drilling increased by 11%, while the number of employees in the sector rose by 16%, even as production declined by 2%.
Financial conditions among contractors are putting pressure on the industry. According to the report, in 2025, 39% of the oil service market's revenue was in a zone of financial risk, compared to 27% in 2021. Companies did not accumulate debt, but the cost of servicing that debt has increased. For the first time, operators' investments in production exceeded the available cash flow by 20%. Ninety-three percent of capital expenditures (CAPEX) are directed to contractors, up from 76% in 2021, analysts note. The wear and tear of drilling rig fleets reached 55%, with their numbers stagnating for several years.
“The cost of a ton of oil has not increased for the operator—it has increased for the contractor. To maintain production at the plateau, the market is increasing the volume of work and personnel, while the margin on services is currently absorbing the difference,” explains Dmitry Kasatkin, managing partner at Kasatkin Consulting.
According to Kasatkin Consulting, the structure of the market by segments has not changed significantly over time.
Independent service providers account for 46%, with 49% coming from players associated with vertically integrated oil companies (VIOC), and 5% from international structures. Analysts identify drilling support, cementing, drilling fluids, and mechanized production as the most rapidly growing and profitable segments, while services related to geological exploration are the least favored. No comments were provided by oil service companies.
Senior oil and gas sector analyst at Euler, Andrey Polischuk, believes that the market will grow mainly due to increasing volumes against the backdrop of OPEC+ quota relaxations. This, according to his estimates, should boost drilling and demand for various oil service companies' services. Open Oil Market CEO Sergei Tereshkin notes that, according to the U.S. Energy Information Administration (EIA), oil production in Russia dropped 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) reported a decrease from 9.26 million b/d to 8.76 million b/d. Experts explain that companies are increasingly maintaining production levels without drilling new wells. However, Tereshkin adds that there is potential for growth—actual production in Russia is more than 1 million b/d below the OPEC+ quota, but the realization of this potential depends on the safety of maritime navigation in the Black Sea. As reported by S&P Global, in August, Russian oil supplies through Black Sea ports fell by more than half compared to July, dropping to 380,300 b/d, while total maritime exports decreased by 12% to 3.83 million b/d (see “Ъ” from September 5).
Director of External Communications at NEFT Research, Dmitry Prokofiev, states that the need to increase investments in exploration and production, including a shift towards more complex and expensive technologies, is creating sustained demand for service offerings. However, the fact that the price factor remains dominant signals limitations on the market's physical growth. According to the expert, high debt burdens, expensive financing, and decreasing profits even amidst revenue growth (see “Ъ” from May 7), along with technological dependence on imports, are systemic problems in the industry. In these conditions, those who can manage debt and invest in technology will hold the advantage, believes Prokofiev.
Source: Kommersant
