Russian Oil and Gas Industry Surprises Analysts

Russia is the biggest oil producer in the world, but the Russian domestic market is not as big as the oil production. Russia’s consumption of hydrocarbons is only about 25% of the domestic oil production, so Russia exports the majority of oil it produces and whatever it refines.

I think the biggest issue that concerns most investors as far as Russian oil production is concerned is the growth rate or decline rate. At the start of the year, there were calls made by quite a large number of commentators that Russian oil production would decline this year by quite a considerable amount. The numbers published were between 1% and 5% and even 7%.

In actual fact, the Russian production is up this year. Year to date it is up 0.4% and we believe it will be up 0.3% for the full year. This growth has really surprised a lot of market commentators.

Although we probably will experience some decline next year because we’re simply not going to see as many new projects launched as we have this year, I think we’ll still end up with a relatively robust production. We certainly do not believe that it’s going to fall off a cliff the way people had expected.

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