Following is the Russian commentary portion from our draft of the final written report on Brown/Khebab Net Oil Exports by the top five:

Russia’s initial 10 year projected production decline rate is -5.1%/year plus or minus 2%. The projected rate of increase in consumption, which is heavily weighted toward recent consumption and therefore on the low side, is +0.3% plus or minus 0.8%. The initial 10 year projected net export decline rate is -8.2%/year, plus or minus 4%. Our middle case shows Russia hitting zero net exports is 2024, within a range from 2020 to 2029.

We believe that Russia’s recent rebound in production was primarily a result of Russia making up for what was not produced following the collapse of the Soviet Union, and based on our mathematical model, Russia has now “caught up” to where its post-1984 cumulative production should have been.

This summer Alfa Bank warned of problems with mature Russian oil fields because of rapidly rising water cuts. Just recently, Renaissance Capital brokerage said that excluding the Sakhalin-1 Field, daily crude output in Russia has been down year-on-year since May. And there have been recent warnings that new fields in Eastern Siberia are too small and being developed too slowly to offset the production declines in Western Siberia.