Oil production in Russia falling for the 5th month in a row

This news is five weeks old. I have been patiently waiting for the English version of it or something with a similar content, but in vain. An article in NY Times misses the point completely by stating that the output decline is only due to YUKOS’ bankruptcy. The bitter truth is that the oil production by other Russian companies is falling too. I tried to translate the original into English. I also added the February 2005 production data to the article. It is intended to sober up those who bought into the professional lies of Russian officials and oil companies stating that Russia possesses a cornucopia of petroleum reserves that can be produced at an ever-increasing rate.

Losing Oil Output
by Tatiana Zakharova

In January 2005, oil in Russia was extracted at the rate of 9.28 million barrels per day (In February 2005, the extraction fell further to approximately 9.27 mbpd-R.C.), a 3.8% increase on January 2004, but 0.5% decrease in comparison with December 2004. Oil extraction has been falling for four (now five-R.C.) straight months and fell to the rate of July (now June) 2004. True, YUKOS’ output drop played an important role; but at the same time, the entire industry is showing the signs of weakness.

Oil extraction by Yuganskneftegaz, former YUKOS’ asset now controlled by Rosneft fell in January by 1.5% as compared to December. The two other producing units still owned by YUKOS, Samaraneftegaz and Tomskneft dropped the output by 2.1 and 6.0 percent respectively.

Worrisomely, other Russia’s leading oil companies decreased production too. Oil extraction by Sibneft fell by 2.1% to 672 tbpd, the rate of Apr.2004, which is only 1.5% higher than that in Jan.2004. This year, Sibneft is expected to disappoint its shareholders. We have lowered the 2005 estimate for Sibneft to 720 tbpd, but now we doubt that even this goal is achievable. Finally, the last year’s growth leaders TNK-BP, Surgutneftegaz, and Slavneft, whose prospects are supposedly brighter than Sibneft’s, all decreased their production in January by 1.2%, 0.2%, and 0.5% respectively.

According to preliminary estimates, the average daily production of oil in Russia in 2005 is expected at 9.62 mbpd, increasing 3.7% on Jan.2004 and edging a modest 4.8% on 2004; a far cry from the 8.9% growth in 2004 in comparison to 2003. However even this conservative estimate is more than likely way too optimistic, especially if oil extraction by Samaraneftegaz and Tomskneft keeps falling.

Oil production in Russia, mbpd
Jan.2004 Sep.2004 Dec.2004 Jan.2005 Feb.2005
8.943 9.420 9.326 9.280 9.270(prelim.)