Russia would be beaten by Saudi Arabia as the world’s largest crude oil producer by 2015, according to a report published by International Energy Agency (IEA). The agency suggested it is the result of the output at new Russian fields that failed to compensate rapidly declining mature deposits.
IEA mentioned in its World Energy Outlook that Russia would now concentrate on supplying natural gas to China and transforming itself into a major source of the fuel rather than gas export monopoly. Russia took over Saudi Arabia’s production of oil during the economic crisis in 2009 when OPEC’s crude output declined.
The Paris-based organisation predicted that Saudi Arabia will be able to match Russia’s 10.5 million barrels per day production capacity by 2015 and cross 14 million barrels per day by 2035. On the other hand, Russia’s production would fall to 9.7 million barrels per day by year end if it implements new stimulus measures for upstream production, IEA added. Difference on the basis of calculations brings out IEA’s figures on the higher side to that of Saudi government’s 10 million barrels per day by 2020.
In 1988, production in Russia peaked at 11.41 million barrels per day under Soviet rule driving it to 10 million barrels per day. Production declined when USSR disintegrated and Russian Federation faced economic and political chaos during the 1990s.
IEA says Russian fiscal policy largely determines the decline in production, limiting the incentive to invest when the prices rise assuming sympathetic evolution of taxation. Russia’s new deliveries to China will maintain its position as the world’s largest gas producer and natural gas exporter.
By 2016, Russia would be exporting gas to China amounting to 68 billion cubic metres (bcm), equal to nearly half of Europe’s intake. Gazprom officials also accepted that the deliveries would hold up due to delay in agreement.
Russia’s reserve capacity is in the form of energy efficient improvements as the hydrocarbon country is trying to diversify away from commodity, said the analysts. Although IEA believes that Russia needs to pick up the pace of change. The international agency also believes that Russia can save almost 1/3 of its annual primary energy used by increasing its energy efficiency in all sectors to the levels of developed countries, an amount equivalent to energy used in one year by the United Kingdom. This would accelerate the modernization of the Russian economy and its dependency on the international commodity prices would no longer persist.