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Russian Oil Exports Plunge in September
14.5 percent drop in exports, that is hell of a drop. However it would be understandable if the report is correct and production dropped 3.7 percent. A 3.7 percent drop from August would be a drop of almost 350,000 barrels per day.
But what was Russian oil production in October. Well the report below gives mixed signals.
Oil output rising in Russia
If the October verses October figure is correct, this would put Russian production in October 07 at 9.620 mb/d in October 2007. However if the 3.7% increase over September is correct then this put October Russian production at near the same figure it was in August, or 9.390 mb/d as 3.7 percent is the exact same amount production dropped in September according to the first report above.
Guess we will just have to wait until the EIA figures come out in January to see what figures we should really use. Of course those figures will not likely be correct but they will be the closest we can ever expect to get.
Ron Patterson
They've been having terrible fuel shortages in Russia. A drop in exports even if production is rising wouldn't be too shocking, I guess.
I promise not to put off topic comments at the top of the comments section. Sorry
I posted this Moscow Times report a few days ago but it just adds to the confusion. It says Russian oil exports fell 17.4% in October! Now wait a minute, if exports were down 14.5% in September, partly because oil production dropped in September, but exports were down an even greater 17.4 percent in October, from the already sharp drop in September, then what the hell is going on? And everything is made even more puzzling since production was supposed to have hit an all time high in October.
Oil Exports Down by 17%
Actually I believe we are getting very mixed reports from Russia. But exports are a more reliable indicator than what some agencies are reporting for production. It is hard to lie about exports. I think production is falling rather sharply in Russia but only time will tell.
Ron Patterson
Since Russia's domestic consumption is a small part of its total production (six million bpd gets shipped abroad) it does not make sense that there would be shortages from declining production at this stage. I also doubt that Russia's production decline would mirror that of the North Sea or worse. As the articles state, there are hefty export tarriffs and domestic gasoline prices are comparabale to those in the USA. This is most likely political games associated with the Putin succession.
Okay Dissident, but what is Russian production doing? Have they plateaued or is production still increasing from one and one half percent to two percent per year? Or, are thy in slow decline.
But a better question would be; just how the hell can we tell?
Ron Patterson
Judging by all of the press clippings they are in a plateau state or going into one. But I do not see any evidence for 15% production drops that would explain shortages.
Why wouldn't Russia's production decline mirror North Sea's or worse?
The decline will be entirely dependent on the state of their fields(not taxes, tarriffs, and prices)...which would be poor in a conservative estimate.
Those fields had a rest since all time peak in the 90s, but recently (last 10) have been abused, mismanaged, and then nationalized(indirectly, of course).
So, worse, seems more plausible.
This site and other peak oil sites discuss differences between sea-bed oil extraction and dry land extraction. The sea-bed cases have quicker decline rates. US oil production certainly has not mirrored the North Sea. The US is a more realistic analogue for Russia than the North Sea. It is not credible that Russian oil exports could decline 15% in few months for geological reasons. The export land model does not apply either since there has been no spike in domestic demand that would eat into exports on this scale. The validity of ELM and future natural production declines are besides the point for the current shortage and oil export drop situation.
Yes...and NO!
Yes, it will not drop 15% in a few months, and it's model will not *normally* mirror a sea-bed extraction.
However, the age (very old) and state of fields suggests *strongly* that Russian fields will decline rapidly and at a greater rate than a well managed group of fields.
I don't think ELM is relevant to the immediate comment.
One would tend to think that the extraction techniques used might also have some bearing on this.
Reading Lukoil's old annual reports, they were mostly using hydrofracturing (physical EOR) for their Enhanced Oil Recovery. Much of the gains for production was coming from EOR, but I think the growth trend from 2003->2004 was already abating. In the annual 2006, 27% of Lukoil's Russian oil field production came from EOR wells.
Maybe it is export land model. But maybe those figures are for 12 months, and october shares most of the september period.
Russia's consumption, relative to production, is on the high side about 33% (total liquids). Also, as noted below our model indicates a rapid production decline, at least in the mature basins, and our middle case indicates that Russia will hit zero net exports in 17 years.
But you can not expect a 15% drop in exports over the timescale of a few months. Assuming the production has changed 0% over the last year would require that there was a 15% increase in domestic consumption. Automobile/truck use is nowhere near this growth rate in Russia. Of course, one can choose to believe that there is a real decline rate of over 10% in Russia. Since this rate is not going to drop (bar significant new discoveries) it should be pretty clear in the next three years if such a rate is realistic since it will wipe out exports much quicker than in 17 years.
edit: it would be more like a 30% increase in consumption not 15% since the consumption is half of the exports.
The key point about the Russian production base is that it is by and large very old. IMO, the rebound in recent years was just making up for what was not produced after the Soviet collapse. So, when the production decline begins, it will probably be very abrupt.
It's easy to do some "what if' scenarios. Round off 2006 total liquids production to 10 mbpd and consumption to 3 mbpd.
At a -5%year decline rate and a +5%/year rate of increase in consumption, using the Rule of 72 production would be down to 5 mbpd in 14 years and consumption would be up to 6 mbpd in 14 years--net importer status.
WT, a couple more months and you can probably add another notch to your belt/rig/pump.
Has anyone been watching OECD stocks?
That would have to have an impact on OECD stocks eventually.
Delays in reporting combined with the normal seasonal downtrend Aug -> Dec mean it might be hard to tell - for a little while...
Come the Jan figure reported in mid-March, I think we might start to see something irrefutable.
--
Jaymax (cornucomer-doomopian)
Based on EIA data, Russia showed a small net export decline from 2005 to 2006. Following is the Russian portion of the working draft of our net export paper:
I wonder if the tax (duty) increase for exports has made it more profitable to sell inside Russia than outside.
For example, the export duty is now about $250/ton which is, if metric, about 7.3 barrels (at 33 degrees API), which means the tax costs $34/barrel.
The duty is going up to $275/ton Dec. 1 which would increase the per-barrel costs by a few dollars per barrel (~$3.40).
What I don't know is when in the process the duty is applied, I believe it is just prior to shipment.
This was the first thing I googled when I'd read your post..
'Russia has begun plans for a strategic petroleum reserve. Analysts estimate the size of the Russian SPR would be around 78 million barrels' ..
http://en.wikipedia.org/wiki/Global_strategic_petroleum_reserves
- and Wiki's sources went to this 12/02/05 article..
http://www.energybulletin.net/11386.html
Just a thought.. It may be classic 'profiling', but I'm not surprised to see sudden energy changes coming from Putin's govt.
Bob
Hello TOD'rs,
Leanan, et al. you guys have been a huge source of info...,
I've been lurking here for many months and can't get enough, my comment, is, Jeff (WT) is a true oricle, and here we go ELM coming true...
Stand up strait, b4 it's too late...
Jeff C.