Russia’s oil & gas production
Russian oil production
Russia today is one of the world’s 3 major oil producers, alongside Saudi Arabia and the US, producing 10.7 MBD (million barrel per day) in 2015.
Russian oil production made a remarkable comeback over the last 20 years. After Soviet-era oil production peaked at 11.4 MBD in 1987, it fell to 9.3 MBD in 1991, the year the Soviet Union dissolved, and continued to fall in the following years, bottoming out only in 1996 at 6.1 MBD.
After a few years of stabilization in the low-6mmbpd range, oil production began to grow rapidly in 2000.
Although widely attributed to a brownfield revival in West Siberia, the run-up in production was supercharged by the introduction of two unique fields, Sibneft’s Surgmutskoye (190kbd at its peak) and Yukos’ 800kbd Priobskoye field.
Russia’s gas sector
Russia possesses nearly a quarter of the world’s proven natural gas reserves and produces around 18% of world output, second only to the US.
Historically, the bulk of Russia’s gas production came from the West Siberian area of Nadym-Pur-Taz, which provided some 85 percent of the country’s production in the 1990s and early 2000s. Historically the price gap between exports to Europe and Russian domestic prices has been wide, allowing Gazprom to cross-subsidize the domestic market with revenues from European exports.
Gazprom’s leverage over its second traditional source of supply, Central Asian gas, was weakened when a second export channel opened up, crossing from Turkmenistan through Uzbekistan and Kazakhstan to China.
An influx of Qatari LNG into Europe and Asia, which is diverted from the US, erodes the tremendous market share held by the Russian gas company Gazprom and significantly reduces its pricing power.