Russia’s oil habit keeps hampers economy

Oil prices have been falling and western European customers, rattled by disruptions of Russian supplies, are looking for other sources of oil and natural gas.

That might be a wakeup call for Russia to stop relying almost exclusively on hydrocarbon exports as the backbone of its economy. Yet Russia is doing little to diversify — and analysts say its dependence on energy resources is only getting stronger.
If prices for oil and gas remain high, the prospect of dwindling reserves as a force to diversify the economy is unlikely to bother Kremlin policy makers for some time to come. Some economists argue there has been a structural shift to higher prices and that oil at under US$30 per barrel is a thing of the past.

At current production rates of 9.7 million barrels per day it would take nearly 30 years to get through the 105 billion barrels in reserves that companies working in Russia report. And that, geologists argue, is a conservative figure. No comprehensive review of Russia’s reserves has been conducted since Soviet times and experts suggest the true figure could be closer to 200 billion barrels.

Russia’s vast gas reserves, meanwhile, can last long into the next century at current production rates, analysts say.

Business Week