ISSN (0970-2083)

All submissions of the EM system will be redirected to Online Manuscript Submission System. Authors are requested to submit articles directly to Online Manuscript Submission System of respective journal.


N. V. Smirnova* and g. V. Rudenko

Department of Physical Education, Faculty of Fundamental and Humanitarian Disciplines, Saint-Petersburg Mining University, St Petersburg, Russia

Corresponding Author:
N. V. Smirnova

Received date: 06 May, 2017; Accepted date: 08 May, 2017

Visit for more related articles at Journal of Industrial Pollution Control


The article is dedicated to the current state of the Russian oil complex, as well as tendencies and main problems of innovative development of the oil industry. It was found that the various negative impacts that characterize the global development of the oil industry, such as the development of alternative energy source, the increase of unconventional hydrocarbon production, the reduction of US imports of oil, the suspension of economic sanctions against Iran, the resumption of oil deliveries from Libya, the growth impairment in global oil consumption, reduce the effectiveness of innovative activities of oil companies and inhibit the development of innovative processes in the complex. It determines the need to enforce the state innovation policy and to develop recommendations to facilitate the introduction of innovative technologies. The special attention is given to studying of environmental aspects of oil companies’ activities. Recommendations for stimulating oil companies to introduce environmental innovations are developed. The analysis shows that Russian companies activity in the field of environmental innovation in contrast to the world's leading corporations is low. In the work statistical methods, methods of strategic and comparative analysis, as well as a systems approach were used. Theoretical and methodological basis of the work was the research of domestic and foreign authors, legislative and regulatory acts of the Russian Federation, the statistical and accounting data of oil companies, the Federal State Statistics Service, the Federal Tax Service of the Russian Federation.


Management, Oil companies, Innovation development, Government regulation, Ecological problems, Foreign experience


The fuel and energy complex is one of the key sectors of the Russian for a long time. According to the Federal State Statistics Service the fuel and energy complex secures 30.5% of Russia’s GDP. At the same time, the oil industry has a significant impact on revenues of the federal and regional budgets, investment climate, exchange rate and other key parameters of economic development of Russia. The satisfaction of internal and external demand for oil and petroleum products, the amount of foreign currency earnings and tax proceeds to budgets depend on performance results of this industry. Thus, the oil industry and the production of petroleum products net of export duties, provided the formation about 23% (2.581 billion. rub.) budget revenues of the Russian Federation in 2014 (The official site of the Federal Tax Service of Russia). Oil resources play an important role in ensuring energy security and political interests of Russia.

The efficiency of the oil industry is greatly affected by the extent of the innovation activities of the companies. The innovation activities include the development and implement of new technologies, the creation and application of new knowledge in the field of exploration, production and refining of oil resources. Innovative activity is depends on innovation policy, which consists of the companies functioning purposes, financial support, organizational, legal and other support early implementation in the sphere of production and services of science and technology.

Russian oil and gas complex is one of the specific areas of scientific and technological progress. The oil and gas complex is characterized by specific features such as a variety of geological and climatic conditions of operation, high social significance, a high dependence on the resource base and the uncertainty of conditions and the results of innovative activities and finally strong global and local environmental impacts.

In recent years, the structure of the mineral resource base of the oil industry is dramatically changed.

Exploration works are complicated, the average depth of the wells is increased, the share of hard-torecover reserves increases greatly.

The development of innovative activity in the oil companies should provide: sustainable development of the oil companies, reducing the current cost of production at all stages of the technological cycle, reduction of investment in the construction of wells; ensuring the competitiveness of oil and gas in the domestic and international markets; maintaining a high level of productivity; improvement of the environment through the introduction of environmentally friendly technologies.

In this connection, the study of tendencies and problems, as well as prospects of innovative development of Russian oil industry is of current importance.

Literature Review

Russian economist (Kondratev, 2002) was one of the first who investigate the role of technical innovation in society. He laid the ground of the general theory of innovation.

He showed how widespread the use of inventions gradually develops into an industrial revolution.

The concept of "innovation" as an economic category was introduced in the scientific revolution by the American and Austrian economist (Shumpeter, 1982). According to Schumpeter "innovation" is the new scientific and organizational combination of production factors, motivated entrepreneurial spirit.

In the work "The Theory of Economic Development" Schumpeter considered the question of "new combinations" of changes in the development and gave a description of the innovative process (Alpeeva, 2016).

(Mencsh, 1979) (German professor, a specialist in economics and expert on entrepreneurship) made great contributions to the study of innovation in his research.

American scientist (Drucker, 1993) formed a theory about the innovation economy and entrepreneurial society. He researched mainly technical and technological innovation. American economist (Rosenburg, 1986) investigated the development of technology.

Various scientists, mostly foreign interpreted the concept of "innovation", depending on the object and the subject of their research.

In Russia, economists (Goldstein, 2004; Ilyenkova, 2007; Medynskiy, 2008; Fatkhutdinov, 1998) devoted their works to problems of the development of innovative activity.

In the last 30-40 years, the general trend in the global oil and gas industry (especially in the industrialized countries) is characterized by the activation of innovative processes. There are different approaches and models of innovative development of the oil complex, which depend on the national goals and priorities, socio-political situation, the level of the development of the national economy, the stage of the life cycle of the oil and gas sector, the mentality of the nation (Aleksandrovskaya, et al., 1996). At the same time, in the historical aspect it is possible to define two opposite models of innovative development of the oil sector, which were have developed in the UK and Norway.

In the UK, the oil field development was carried out mainly the world’s leading technology companies in the world with the participation of service and knowledge-intensive companies. As a result, hightech oil industry wasn’t created in the country (Shafranik, 2012).

In contrast to the English model, in Norway for a long time the conditions for the development of the national high-tech service companies and system of scientific and technological centers were formed under the control of the state (Shafranik, 2012). At the present stage of development, there is a gradual modification of models. In the English model the regulatory role of the state increases. The model of Norway becomes more liberal (Zhovtobryukh, et al., 2014).

Researches of leading Russian scientists, as well as a variety of consulting and research organizations such as the Skolkovo Moscow School, Vygon consulting, Ernst and Young, etc. are dedicated to innovative processes in the Russian oil industry. At the same time, global experience of innovative development of the oil industry is of particular interest to Russia.


In order to determine the directions of development of Russian oil companies’ innovative activity the analysis of the current state of the oil complex was carried out. The trends and the main problems of innovative development of oil industry in Russia were studied.

The main problems of the oil industry in modern conditions

In modern conditions, oil is one of the main energy resources. It can satisfy the constantly growing power needs of the population and rapidly developing global economy.

Oil is strategically important for many countries, but the development of the oil industry is accompanied by the following problems (Smirnova and Pikalova, 2015):

1. Activation of the integration and diversification's processes in companies of the oil industry. All this leads to a complication of intrarelationships and reduces the level of transparency of the strategic business units and the possibility of monitoring the management company.

2. Involvement in production the hart- torecover oil reserves.

3. An insufficient efficiency of field exploitation in the part of the most complete and comprehensive resource extraction.

4. Low ecological compatibility of the production, transportation, and processing of oil

5. The dynamism and uncertainty of environmental factors.

Analysis of the Russian oil industry shows that the main problems of its development is unstable, decrease the most of important indicators of the efficiency of production, the slow improvement of the production and export structure, high physical and moral depreciation of fixed assets (Cherepovitsyn, et al., 2014).

According to the Federal State Statistics Service, the deterioration rate of fixed assets in the oil companies is 52.8% Table 1. The share of fully depreciated equipment in 2013 reached 23% for the enterprises engaged in mining, and 23.5% for enterprises engaged in production of crude oil and gas.

The title of indicators 2005 2010 2011 2012 2013
Deterioration rate of fixed assets by industry (%)
Total output in the mining sector 51.7 46.8 48.4 49.6 52.3
Fuel and energy production 52.5 47.4 49.1 50.4 53.2
 Production of crude oil и petroleum gas; извлечение фракций из нефтяного (попутного) газа 54.6 46.2 48.1 49.4 52.8
Production of minerals other than fuel and energy 45.1 39.5 40.4 40.3 41.7
The share of fully depreciated fixed assets in the total amount of fixed assets by industry (%)
Total output in the mining sector 21.9 19.8 20.3 20.3 22.9
Fuel and energy production 22.5 20.4 21.0 21.0 23.9
Production of crude oil и petroleum gas; fraction extraction from oil gas 24.1 20.0 20.2 20.2 23.5
Production of minerals other than fuel and energy 16.9 12.7 12.1 12.6 12.0

Table 1. The indicators of fixed assets (The official site of the Federal State Statistics Service)

The highlighted problems and features of the oil sector's development require the introduce of innovation in order to achieve short-term and longterm goals.

Innovative activity of oil companies in Russia

Innovations as a tool and method of social-economic development were first considered in Russia at the beginning of 80’s of 20 centuries. Though fundamentals of state policy in the field of science and technologies, the main target thereof was transition of the state to innovative development, were determined only in 2000-s.

In terms of its development oil industry in Russia significantly differs from leading oil states. Innovative feature of oil sector in Russia is under great influence of negative trends of oil industry development during period of planned and transitional economics.

Level of innovative activity of the state and industrial companies in Russia is significantly lower than level of other countries in this area. Thus, internal costs for research and developments in Russia in general made 1.19% GDP in 2014, whereas this aspect in the USA makes 2.77% GDP and in Japan -3.44% (The official site of the Federal State Statistics Service). In absolute values our country spends less for research and development than Spain, Taiwan, Belgium and Israel (Cherepovitsyn, et al., 2014).

Financing of innovative activity in Russia remains at a quite low level, though necessity of development of this aspect of operation of all industrial companies leaves no doubt. Nevertheless, costs for technological innovations increased 5 times for the previous 10 years, and the main source of financings of costs for technological innovations refers to own capital of the companies. Nevertheless, specific weight of all domestic companies ensuring technological innovations remains at a low level. If we consider companies ensuring production of fuel-energy resources, specific weight of innovative companies makes as low as 7.2%. And this value is reducing during recent 5 years.

Table 2 gives main indicators of innovative activity of companies in Russia.

The title of an indicator 2011 2012 2013 2014
The costs of technology innovations, thousand rubles
Total output in the mining sector 70 239.3 87 775.3 94 525.7 123 898.8
   Fuel and energy production 65 836.2 79 532.4 84 347.2 113 049.4
   Production of minerals other than fuel and energy 4 403.1 8 242.9 10 178.5 10 849.6
The share of costs of technology innovations in total volume of goods supplied (works carried out or services rendered), %
Total output in the mining sector 0.9 1.1 1.1 1.4
   Fuel and energy production 1.0 1.2 1.1 1.4
   Production of minerals other than fuel and energy 0.4 0.7 0.9 1.0
The share of companies introducing marketing innovation, %
Total output in the mining sector 0.7 0.6 0.4 0.5
   Including: 1.1 0.4 0.4 0.5
   Fuel and energy production 0.2 0.8 0.5 0.5
The share of companies introducing organizational innovation, %
Total output in the mining sector 3.9 3.1 2.5 2.3
   Including: 5.8 4.1 2.9 2.6
   Fuel and energy production 1.2 1.8 2.0 2.0
The share of companies introducing ecological innovation, %
Total output in the mining sector 4.9 3.4 1.8 1.6
   Including: 6.2 4.3 2.0 2.1
   Fuel and energy production 3.1 2.3 1.4 0.9

Table 2. Indicators of Russian companies’ innovative activities (The official site of the Federal State Statistics Service)

As it can be seen from the table, all indicators of innovative activity of industrial, in particular oil companies in Russia are at a quite low level.

Main issues of innovative development of oil companies

Analysis of statistical data, as well as main trends of oil industry development enables determining the following main issues:

- Low level of Russian innovative technologies, what stipulates high specific weight of imported foreign technologies and causes problems in modern conditions due to enforcement of sanctions;

- Lack of significant tax and tariff incentives for oil companies in the course of innovations implementation;

- Lack of balance in development and lack of economic interaction between separate elements of innovative structure (science and business) and as a consequence inefficiency of mechanism of knowledge and new technologies transfer;

- Underdevelopment of economic and legal mechanisms of instruction of intellectual activity results into economic turnover.

Alongside with that there is a number of circumstances, which enforce necessity of innovative development of oil companies from year to year:

- Exhaustion and deterioration of oil reserves quality;

- Development of alternative sources of energy;

- Increased lack of stability in the world market of energy sources;

- Stiffening of institutional frameworks of oil complex development.

Russian oil industry has all conditions required for activation of its innovative development. Moreover, recently these conditions become more and more favorable and sufficient. But, as noted before, according to statistical data, innovative renovation of oil industry occurs quite slowly.

Thus, Russia needs systematic large-scale financing of innovative activity of oil companies to improve their technical and technological level along the entire production chain.

At the same time, due to low ecological performance of oil production a special focus, to our opinion, should be made on the issue of energy and resources saving and protection of environment.

Ecological characteristic of oil companies

Objects of oil industry companies are among leaders in many regions of Russia in terms of their influence on the environment.

All the components of environment in the oil production areas are under intensive industryrelated loading Table 3, and level of negative influence is determined by scope and duration of deposits operation.

Environment (Polozov, 2012) Stage of the field development (Polozov, 2012)
Exploration and survey Extraction Oil preparation and transportation
Atmospheric air Gas-dust pollution during construction of the roads and industrial plots Emissions to the atmosphere carbon dioxide (СО2), pollution of sulphureted hydrogen, sulfur oxide, nitric oxide during well operation Burning of associated gas
Emission of discharge gas by transport facilities and engine of the drilling machines
Earth surface Violation of land-cover, surface runoff, territory relief (The official site of the Federal State Statistics Service) Violation of the environmental situation during the construction of the oil pipelines
Removal of a large amount of agricultural land
Reduction of ecosystems’ bioproductivity (The official site of the Federal State Statistics Service) Emergency oil spills during on-shore production Oil spill during oil-field lines and trunk pipelines transportation
Accumulation of production waste
Aqueous medium The use of large amounts of water
Breaking the water-bearing horizon’s isolation Oil spill during sea transportation
Contamination of surface and subsurface waters by cleaning fluid
Leakage of polluting substance during exploratory well drilling Emergency oil spills during off-shore production

Table 3. Oil companies’ influence on the environment

In the course of oil fields development many contaminants (apart from oil), chemical reagents, which are used to drill wells and intensify extraction of carbons, high-active oil-field waters and oilassociated gas enter the environment. Apart from companies of oil industry annually destruct about 14 thousand hectares of land, make use of a lot of fresh water, accumulate production waster in special sediment ponds, storage pits and vessels, a part of which is not treated in due course and becomes an additional source of the environment contamination.

Every year oil companies implement a large complex of environment protection activities characterized with innovative orientation. But only main and most important activities have been implemented in this area. Thus, Table 4 gives specific weight of fuel-energy companies implementing innovations ensuring improvement of ecological safety (in percent of general number of companies ensuring ecological innovations).

Direction of ecological safety improvement 2011 2012 2013 2014
Reducing material costs for production of a unit of goods, works and services 45.3 35.9 52.6 20.0
Reducing energy costs for production of a unit of goods, works and services 50.9 69.2 52.6 50.0
Reducing carbon dioxide (CO2) emission to the atmosphere 49.1 61.5 47.4 45.0
Replacing raw materials and materials with safe or less dangerous ones 28.3 33.3 47.4 20.0
Reducing contamination of the environment (atmosphere air, land, water resources and reducing noise level) 75.5 87.2 94.7 90.0
Ensuring secondary treatment (recirculation) of production waster, water or materials 45.3 56.4 36.8 50

Table 4. Specific weight of companies implementing innovations ensuring improvement of ecological safety, % activities (The official site of the Federal State Statistics Service)

As it can be seen from the table, specific weight of companies implementing innovations is reduced from year to year practically in all directions of ecological safety improvement, what is a negative moment in development of oil complex.

Nevertheless, the issue of environment protection and sustainable use of natural resources at oil deposits of the country is the most important direction in the activity of oil companies. Therefore, innovative development in this direction acquires a special importance.

Main prospects of innovative activity development in the oil companies

Thus, development of oil industry in Russia should be oriented on growth and improvement of raw material base, reduction of costs in all chains of the production process and ensuring ecological safety of the production.

As noted above, the level of innovative activity of oil complex companies remains low. Meanwhile analysis of innovative activity of Russian and foreign oil companies has shown that foreign companies orient their innovative activity on medium and long-term perspective (development of non-traditional carbons and utilization of restorable sources of energy), the main target of Russian oil companies is to improve operational performance of the production.

To our mind, the following trends should be considered among priority prospects of innovative development of oil companies Table 5.

Innovative activity prospects Deposit development stage
Exploration and survey Extraction Oil preparation and transportation
Technological and organizational innovations Equipment of  geological survey services in three-dimensional (3D) seismic survey of the territories Establishment of new types of reagents and modern equipment for development of complex deposits and ensuring sustainable development of stock Reconstruction of industrial oil preparation objects with implementation of new technologies and replacement of equipment with more advanced and cost-effective one
Creation of equipment and software products to calculate stock and design development of oil deposits Implementation of innovative technological solutions to stabilize oil production decay on account of its intensification at current well stock Establishment of new and expansion of existing economically effective export trends of oil transportation
Using technologies oil digital oil fields
Ecological innovations Implementation of technologies aimed to reduce losses of material technical and fuel-energy resources (ensuring energy efficiency and resource saving)
Implementation of modern technologies that will contribute to reduction of contaminants leakages during drilling of exploration wells Implementation of technological for processing oil-associated gas into synthetic crude oil
Implementation of modern technologies that will contribute to oil losses reduction and ensure efficient processing of oil-containing waste

Table 5. Priority prospects of innovative activity development of the oil companies

Activation of innovative activity requires taskoriented state policy and financial support of innovation process, utilization of oil companies’ resources and development of sectorial science. Implementation of respective tax, tariff and depreciation policy is the most important condition to encourage innovative activity.

Activation of scientific research will enable ensuring transition to innovative designing of deposits development with hard to extract oil stock and implementing modern technologies of oil treatment, etc.

State programs of ecological technologies and innovations development encouragement, profile research centers and funds are established in many countries, e.g. Japan, Germany, Austria, Norway, Italy, Great Britain, Canada and France. In Russia, Federal law of the Russian Federation dated 2002 determines the importance of innovative aspect in the environment protection. Many Russian companies modernize technologies, trying to reduce anthropogenic exposure on the environment and certify their activity in accordance with internal standards.


Due to the results of research of the main problems, the environmental aspects of the activities of oil companies and their innovative development in modern conditions the following may be concluded:

1. Russian oil industry is one of the key sectors of the economy. It forms a significant part of the country's GDP, provides a stable tax revenues to the federal and regional budgets.

2. In recent years, the structure of the raw material base of the oil industry has seriously changed. Exploration works are complicated, the average depth of the wells is increased, and the share of hard-to-recover reserves increases greatly. These factors highlight the need to develop of innovation activities in various stages of oil fields' development.

3. An important factor contributing the need to intensify innovative processes is the high level of oil production's impact on the environment. In the oil-producing regions the environment experiences intense development pressure.

4. Despite the gradual formation of investment and innovation process, the innovation activities' costs of oil companies is quite low, as well as the pace of introduction of innovation in Russia.

In modern conditions for solving problems related to negative trends in the development of the oil complex, taking into account the environmental aspects of the functioning of the oil companies, it is necessary the implementation of technological and environmental innovations. These innovations is aimed at the development of hard-to-recover reserves, introducing of resource-saving and energy efficient technology, full utilization of associated petroleum gas, reduction of waste production, etc.


  1. Aleksandrovskaya, N.D., Burchenkov, L.F., Bushuev, V.V., Vinitsky, M.M., Gavura, V.E., Javadyan, A.A., Korelyakov, L.V., Kurashev, V.D., Makarov, A.A., Solovyanov, A.A. and Shafranik, Yu.K. 1996. Oil industry. Priorities of scientific and technological development. LLP "Rarog". Moscow.
  2. Alpeeva, T.A. 2016. Prospects for the development of innovative enterprises. Young scientist. 1 : 289-292.
  3. Cherepovitsyn, A., Smirnova, N. and Ilinova, A. 2014. Challenges and opportunities of the innovative development of the fuel and energy complex of Russia. Polytechnic University Press. St Peterburg.
  4. Drucker, P.F. 1993. Innovation and entrepreneurship: Practice and principles. Longman Higher Education. London.
  5. Fatkhutdinov, R.A. 1998. Innovation management. Business School “Intel-Synthesis”. Moscow.
  6. Goldstein, G.Y. 2004. Strategic innovation management. TRTU. Taganrog.
  7. Ilyenkova, S.D. 2007. Innovation management. Unity-Dana. Moscow.
  8. Kondratyev, N.D. 2002. The world economy and its conjunctures during and after the war. In: Big cycles of conjuncture and the prediction theory (40-43). Economy. Moscow.
  9. Medynskiy, V. 2008. Innovation management. Infra-M. Moscow.
  10. Mensch, G. 1979. Stalemate in technology. Balling, Cambridge.
  11. Polozov, M.B. 2012. Ecology of oil and gas complex: Methodical and training materials. Udmurtia University. Izhevsk.
  12. Rosenburg, N. 1986.The impact of technological innovation: A historical view. In: The positive sum strategy: Harnessing technology for economic growth (17-32). National Academies Press. Washington D.C.
  13. Schumpeter, J.A. 1982. The theory of economic development: an inquiry into profits, capital, credit, interest and the business cycle. Transaction Publishers. London.
  14. Shafranik, J.K. 2012. The oil and gas sector, the need for an interchange between paradigms. Теrrа Economicus. 10(2) :179-182.
  15. Smirnova, N.V. and Pikalova, T.A. 2015. Improving the performance of the petroleum industry through the use of benchmarking tools. J. Econ. Entrepreneurship. 5(1) : 458-461.
  16. The official site of the Federal State Statistics Service. URL:
  17. The official site of the Federal Tax Service of Russia. URL: .
  18. Zhovtobryukh, Yu., Nordkvelde, M. and Reve, T. 2014. The innovation performance of the Norwegian offshore industry. A report for the Norwegian oil and gas association. Forskningsrapport. Handelshoyskolen BI.

Copyright © 2024 Research and Reviews, All Rights Reserved