Russia starts to pay price for its energy strategy

Russian oil output in 2003 was increasing at such a swift pace even Saudi Arabia worried about upstart energy companies – including Yukos and Sibneft – then posting production gains of more than 20 per cent.

But from 2004 the Moscow government changed its tax regime and began to take over privately held assets, including Yukos, and so Saudi Arabia’s fears proved short-lived.

As a result of these and other policies, average production growth in Russia has slowed to 2.5 per cent from a high point of 12 per cent in 2003. The problem has become so severe that Russian politicians and energy executives fear that this year the world’s second biggest exporter may see its first decline in 10 years.

Financial Times