The Wall Street Journal: Russia bets on shale oil to defend its spot as top producer of crude

KRASNOLENINSKOYE OIL FIELD, Russia—This western Siberian oil field is called “Red Lenin,” but its reserves have a distinctly American ring: shale.

The future of the Russian oil industry could lie in the vast Bazhenov shale formation, the largest in the world. Russia has become the biggest global producer of crude oil with almost no contribution from shale CLG8, +0.85% LCOH8, +1.00%  a sometimes technically difficult and expensive resource to pump.

Only Americans have really gotten shale right so far, but the Kremlin is taking the first steps to unlock Russia’s potential.

‘The Bazhenov is a huge prize.’

Alexei Vashkevich, Gazprom Neft’s exploration director

Companies like PAO Gazprom Neft are leading Moscow’s drive to replicate the U.S. shale boom, experimenting with a uniquely Russian, state-controlled approach to fracking that contrasts with the free-for-all among independent producers in Texas and North Dakota.

The Kremlin is offering tax breaks for shale production and encouraging collaboration among companies and other players such as research institutes, hoping that fracking can help stave off a reckoning for its oil industry.

Vashkevich, who worked on the Bakken Shale formation in North Dakota for Hess Corp., said Russian shale will develop in a fundamentally different way from U.S. counterparts.

An expanded version of this report appears on WSJ.com.

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