Oil : pravda : Russia suffers decline in oil industry


Richard Moore

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


Russia suffers decline in oil industry as crude market
recovers after hurricanes -10/12/2005 22:24

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

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.

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.

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