Russia’s oil boom may be running on empty

MOSCOW – The Russian oil boom, which has produced a gusher of cash, political power and an opulent elite – and has helped fuel the country’s renewed assertiveness in Georgia and elsewhere – is on shakier ground than officials in Moscow would like to admit.

Most of the oil produced after the country’s 1998 financial collapse has come from drilling and re-drilling old Soviet oil fields with more advanced equipment – squeezing more black gold out of the same ground – and efforts to develop new fields have been slow or non-existent.


That strategy is potentially disastrous, said Valery Kryukov, who researches oil companies in western Siberia for a government-funded think tank.

“If the situation which exists now stays the same, oil production will start to decline seriously in two years,” Kryukov said in a phone interview from his offices in the city of Novosibirsk.

The implications extend far beyond Russia’s borders. Last year, Russia was the world’s second-largest oil producer. If its output begins to decline or is hampered by inept or corrupt business practices, the price of oil could begin climbing again.

McClatchy Newspapers