Russia » Economics
Author`s name Ольга Савка

Russia suffers decline in oil industry as crude market recovers after hurricanes

Russia still remains one of the top oil exporters, although the national crude output has been decreasing laltely

The Russian oil industry has boundless opportunities and brightest perspectives. This assumption has become quite popular during the recent years, although it has been called into question now. Experts say that Russia has been losing its oil power on the world market of liquid black gold. crud output

According to the report from the International Energy Agency, which was published yesterday in Paris, the crude output started decreasing in Russia in 2005 and dropped almost 2.5 times as opposed to 2004. However, Russia still ranks the top oil exporter among all non-OPEC members. According to preliminary estimates, Russia was extracting 9.8 million barrels of crude daily in September of the current year and gained 70,000 barrels a day in comparison with August of the same year. It is expected that the crude output will increase by some 300,000 barrels a day until the end of 2005 vs. 2004. A similar increase in the Russian oil industry was forecast for 2006 too. Nevertheless, IEA experts believe that it is not an optimistic factor at all. The growth in the oil extraction during the forthcoming two years in Russia will be a lot lower than in 2004, when the crude output increased by 740,000 barrels a day over a year.

While Russia's crude output was dropping, OPEC member-countries took advantage of the situation and increased their production by 100,000 barrels a day in September. Iraq and Kuwait became the leading states at this point. As for the total global extraction, it dropped to 83.3 million barrels a day in September, having decreased by 845,000 barrels a day in comparison with August, International Energy Agency experts said. The reduction occurred as a result of the two devastating hurricanes, Katrina and Rita, that severely damaged the crude extraction in the Gulf of Mexico. Experts, however, do not tend to make the situation even more dramatic: a lot of specialists are certain that the hurricane-stricken oil industry will recover in the near future completely. To crown it all, the oil demand has been reducing lately, basically due to the end of the automobile season in the USA, whereas the leaders of several Western states set out their readiness to use strategic oil reserves to compensate the shortage of petroleum products.

The progressive reduction of the oil output in Russia against the background of rather positive conditions may probably testify to serious problems, which the national oil industry has been suffering from lately. The oil deposits, which Russia uses at present, do not provide the necessary efficiency anymore. On the other hand, the state-run tough policy in the oil industry does not inspire anyone to invest in the development of new oil fields. The state apparently wishes to accumulate almost the entire oil export income.

One should bear in mind the fact that any kind of money possesses an unpleasant quality to end very quickly, although it takes years for oil specialists to find a new oil field, develop it and organize the actual production process. Even if the government realizes the need to develop new oil and gas deposits, precious time will be lost for good anyway. Finally, scientists may find an alternative source of energy, and oil, as the basic energy source, may go out of use in about 20 or 40 years.

You can discuss this article on Pravda.Ru FORUM