Peak Oil in Russia? - 4/18/08

Oil is again approaching an all time high of $115. One of the reasons for this renewed increase is the decline of production from Russia, the world’s second largest oil exporter.

Russia did not grow its oil output for a third month in a row. The first quarter closed with a one percent production decline year on year. March oil production was down to 9.76 million barrels per day from 9.79 million bpd in February, which is also well below the 9.93 million bpd in October of 2007.

UBS reports that Russian oil production could drop over one percent this year if thousands of new wells are not put in place.

ExxonMobil, which leads the Russian facility Sakhalin-1 project, expects its production to decline this year from its peak of 250,000 bpd last year due to field depletion. Output has declined by 0.1 to 1.5 percent at all major Russian producers including Russia’s largest state controlled oil producer Rosneft.

March oil exports to Europe recovered to 4.23 million bpd from 3.99 million bpd in February, which was the lowest level since 2004.

Studies show Russian oil production has already peaked. If this is true the implication of “Peak Oil” in Russia will be dramatic for the entire world.

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