Russian Oil Supply

Russia has come to the forefront of hopes for increasing world oil supplies and abating historically high prices. While production rose from slightly more than 6 million barrels of oil per day in 1998 to over 9 million barrels per day in 2004, long-term continuation of such a dramatic rate of growth cannot be expected. An understanding of Russian oil supply is reached in Russian Oil Supply starting with an investigation of the petroleum geology
of the nation's two principal producing basins: the Volga-Ural and West Siberia. To this is added a review of the engineering technologies applied over the Soviet period and the impact they continue to have on
productive capacity today. The collapse of the USSR in 1991 generated a fundamental change in the economics of Russian oil production. The transition from a command to largely market-driven industry created an opportunity to study supply in response to changes since independence in the after-tax net income earned at the wellhead by oil companies. That analysis provides an objective foundation for bounding near-term responses in supply to higher world prices and changes in the
controlled price of oil on the domestic market. The performance of top major Russian oil companies that dominate the industry is highly varied. Examination of their asset bases and management
strategies allow identification of critical issues before these companies and their latitude in meeting them. The lack of a robust 'independent' sector among Russian producers is seen as a significant impediment to exploitation of resources located in a very large number of discovered but undeveloped fields. The most important problems facing the Russian government and producers are the balance of power between them and determination of how much production and exports are 'enough'.
Since 2003, the Putin administration has radically increased the position of the state in industry operations and downgraded market mechanisms. Growing uncertainty over the limits of this policy have
shaken production growth and sharpened questions over oil's role in Russia and how it interacts with world markets.