To my knowledge, vast stretches of Siberia are actually quite mountainous, but I won’t dither with another man’s metaphors. Energy Tribune reports on Russia’s stagnating oil production after the jump. 
Russia’s Oil Production: Flat Like Siberian PlainBy Pavel Romanov, Energy TribuneThe oil and gas sector may have been good for Putin, but you can’t say Putin has been good for the industry. In 2007, oil production grew by just 2 percent, a fraction of the growth seen between 2001 and 2004. Since then, the structure and ownership of the industry have devolved back to the state, and as state control has grown, output has fallen.Oil Production in Russia 2000-2007The early 1990s were burdened by the aftermath of the Soviet Union’s collapse. As such, the industry was hamstrung by low oil prices and declining production. But by the end of the 1990s, production in several newly minted private companies started rising. From 1998 to 1999, Yukos, first among Russian companies, started growing its production, thanks to new technologies and leadership styles. Yukos became the pioneer of the Russian oil industry’s resurrection. With more cash flowing and oil prices rising, most Russian oil and gas companies used the opportunity to hone their business efficiency.Private companies were the first to engage foreign service companies and new technologies, which helped them overtake the former leading Russian oil companies. Yukos and Sibneft started drilling horizontal wells and executing large hydraulic fracturing jobs with help from leading international service companies like Schlumberger and Halliburton. Yukos and Sibneft were growing at rates between 12 and 20 percent every year, until 2004 when Yukos was broken up and then sold out to state-owned Rosneft in 2005. Meanwhile, Sibneft was taken over by Gazprom. Other industry leaders like Lukoil, TNK-BP, and Surgutneftegaz saw production growing at about half the rate of Yukos and Sibneft.Between 2005 and 2007, with the state controlling more than half of Russia’s oil production (and with rapidly rising prices), production increases stagnated. Indeed, as the graph shows, between 2000 and 2004, production grew at an average of about 9 percent per year, while in the last three years the trend has been 2.5 percent per year. (Note: As of this writing, there were no official statistics for the last 2 months of 2007, so the final 2 months assumed the average of the prior 10.)
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3 Comments
This argument is flawed.Russia’s oil production is increasing 2.5% per year, but we must remember that Russia’s the world’s leading oil producer already. Therefore, that 2.5% goes a whole lot.Like when some argue that it doesn’t matter that the United States’ GDO growth rate is one-third of Russia’s because the U.S. is starting from a much larger base. Same argument.Additionally, while Russia’s oil production is growing steadily, that of some other major producers in the world is not just remaining flat but actually falling! I’m talking about the U.S., Mexico, Norway, the U.K.How can Romanov justify these facts? Aren’t these countries open and liberal. With the exception of Mexico, isn’t production in this list of laggards dominated by your more well known names in the biz? Hmm !?!People who read Energy Tribune are a pretty educated bunch, I would say, and yet we get this garbage that insults our intellience, imho .
COLEEN:Thanks for admitting that Russia’s GDP growth is insignificant compared to America’s. Please spread the word!Meanwhile, try to read a bit more closely, dear. The point isn’t that 2.5% is insignificant, it’s that Russia’s rate of growth today is ONE THIRD what it was five years ago. If the US GDP growth rate was 1/3 of what it was five years ago, everybody would agree that is a problem and would properly blame the president for his part in the debacle.People like you, who rationalize Russia’s failure in the name of friendship, help to destroy the nation by preventing reform more surely than any “enemy” could ever do.
Just to add to my previous point, how can Pavel Romanov justify the following:Exxon Mobil – 2007 2.616 million bpd, 2006 2.681 million bpdBP – 2007 2.414 million bpd, 2006 2.475 million bpdRD Shell – 2007 1.818 million bpd, 2006 1.948 million bpdObviously something must be wrong because these are private companies, first and foremost, who are also technologically advanced and working in conjunction with leading international service companies like Schlumberger and Halliburton.I seriously hope that Pavel Romanov somehow reads this because I am in need of an explanation as to how a backwards nation like Russia, with its mediocre and inefficient “national champions” can increase its production in an environment where its leading competitors in the west are in a steady decline.(not to mention the Kashagan fiasco, for example, where a western consortium operating the world’s largest oil discovery in 30 years is 5+ years over-schedule and $80b over-budget)La Russophobe, we agree on the GDP point. Russia’s economy, compared to America’s is miniscule. Yet, one can argue – and Goldman Sachs has – that Russia can become a top 5 economy and close the gap it has with the U.S. in a relative short period of time.Only time will tell, but Russia’s GDP growth for 2007 appears to have trumped all expectations, with the most recent estimates putting it at an impressive 8.1%.