The Oil Drum

There are few subjects regarding peak oil as important as the uncertainties around what Russia's reserves are and the mysteries of what their future production will be. J. Robinson West, chairman of PFC Energy, says in The future of Russian energy

The world needs every barrel of Russian oil. With growing Chinese and Indian demand and the insatiable appetite of the United States, markets will be tight and even more reliant on the Middle East. Given today's high oil prices, Russian companies and the Russian government believe that they can fund a good part of new developments and even infrastructure projects themselves. Additionally, Chinese and Indian companies, with the strong backing of their governments, are ready to do business with Russian companies and the Russian government. Their investment criteria are more in line with the approach favored by their Russian hosts. Skills as well as money will be crucial, however, and they bring few. If as a result Russia cannot sustain its current oil production level, this will negatively impact world oil markets.

A faltering Russian oil sector would be a disaster for the world economy as well as for Russia itself. President Putin must recognize that he needs a petroleum sector with well-managed and well-capitalized oil, gas and pipelines. He is well within his rights to want the state to dominate it, but it must be managed efficiently. The Yukos affair, as well as infighting in the Kremlin and a lack of transparency and predictability, indicates that he is going in the opposite direction and could hurt Russia's interests as well as the world's if he does not correct his course.

This post takes no official position regarding Russian reserves and predictions about their future production. Lately, there has been controvery regarding some statements made by westexas who, using some data modelling being worked up by Khebab, is predicting a rapid decline in Russian production in a pretty short timeframe. Naturally, if this does occur, the world could be in for a very rough ride. Here, I will present the best data and estimates I can find outside the world of Hubbert Linearizations to give TOD readers a chance to consider the uncertainties surrounding Russia. I should also mention that HO did a post It would be nice, but... back in October covering some of these issues but not in this kind of detail.