Start the conversation
The shale oil and gas boom is going global, as we explored Tuesday in Money Morning.
And this means huge profit opportunities for those who know how to invest in this global shale revolution.
Money Morning Global Energy Strategist Dr. Kent Moors speaks of "massive finds" in areas outside the United States – finds that could dwarf even the colossal Bakken formation in North Dakota.
In fact, the largest shale oil deposit could contain up to 100 billion barrels of recoverable oil… that's five times the amount of recoverable oil in the Bakken.
Energy investors wanting to cash in on this bonanza should look to the birthplace of vodka, the home of the Kremlin, and the country that already boasts the world's largest natural gas reserves.
That's right – the big story on how to invest in the global shale oil and gas boom begins in Russia.
Russia's Bazhenov Shale
The Bazhenov, the largest unconventional shale oil deposit in the world, is located in Siberia about 2,000 miles east of Moscow.
Tom Reed, chief executive officer of Ruspetro, a small oil company with 300,000 acres in the Bazhenov, told the Financial Times that the Bazhenov "is bigger than the 10 to 15 next biggest shale plays combined."
This massive shale formation is expected to become the centerpiece of Russian oil efforts over the next 20 years, surpassing exploration and drilling efforts of even the newly opened Arctic regions. Oil production in the Bazhenov is expected to increase to 2 million barrels a day by 2020. The Russian Energy Ministry hopes the increase will boost the share that tight oil production holds of the country's total oil production, from a mere 0.2% to 11% by that same date.
The vast untapped potential of this resource went unrecognized for decades, until the U.S. shale revolution began making headlines.
Up until now, however, steep oil production taxes have hampered efforts in the Bazhenov. Ruspetro reported to the Financial Times that for every barrel of oil produced in Russia, it had to pay $23 in mineral extraction tax and $55 in oil export duty.
But things are changing…
In an effort to encourage exploration and investment in oil extraction and production, the Russian parliament recently passed legislation granting a complete waiver of the mineral extraction tax for companies drilling in the Bazhenov, as well as reducing oil export duties.
These new tax incentives are expected to clear the way for increased shale oil production in the Bazhenov, opening the door to great investment opportunities.
That means now's the time to know how to invest in Russia's nascent shale industry – starting with the oil companies.