Are Claims Of Peak Oil Production In Russia Overblown?
Russian authorities have announced that domestic oil production hit 11.36 million barrels per day (bpd), on average, in September (Vedomosti, October 2). This marks a new historic peak, reached despite the often-cited poor shape of the Russian economy and negative impact of Western sanctions, not to mention the restrictions self-imposed on Moscow by the 2016 deal with the Organization of the Petroleum Exporting Countries (OPEC) (see Jamestown.org, March 8). Commenting on this fact, Vagit Alekperov, LukOIL’s CEO and principal shareholder, assumed the current output levels cannot be sustained, arguing that Russia has already reached the limit of its oil production capacity. On the other hand, Russia’s Energy Minister Alexander Novak strongly disagreed (Neftegaz.ru, October 3).
Alekperov’s estimate should be considered with at least some degree of skepticism. First of all, such bearish assessments have been made—incorrectly—many times in the past. Back in 2005, then–deputy prime minister Viktor Khristenko predicted that oil production, at that time at 9.6 million bpd, would definitely decline after 2010 (Versia, August 25, 2016). And four years later, Mikhail Krutikhin, one of Russia’s most respected energy analysts, told Western journalists, “We now see production peaked last year,” so, “I believe the decline will continue for quite a number of years” (BBC News, April 15, 2008). Several other notable examples of suggestions that the Russian oil output had peaked could also be mentioned. And until recently, the consensus forecast for 2020 stood at 10.2 million bpd—i.e., more than 10 percent below the rate recorded last month.
Could Russia’s oil output continue to grow in the years to come? Such a scenario is certainly probable, but it will only be achieved as long as several difficult conditions are rectified.
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