Russian Oil Production May Grow Only 2.4% in 2005

A new government forecast shows Russian oil production this year could grow by as little as 2.4% to 9.42 million barrels a day, as increased state pressure on the oil business has caused a drop in investment.

The preliminary outlook, released this week in a quarterly report from the Ministry of Economic Development and Trade, comes in about 300,000 b/d below other Russian official forecasts that call for growth of about 5% this year. It’s also one of the first official admissions that the sharp worsening of the business climate since last summer – when the government began dismantling oil giant OAO Yukos (YUKO.RS) in a back-tax case widely viewed as politically motivated – has severely affected a sector that’s been critical to economic growth.