Russia world’s largest producer of crude oil and lease condensate

Russia coat of arms
Source: DollarPhotoClub

A recently published report by the U.S. Energy Information Administration (EIA) has shown that Russia is the largest producer in the world of crude oil, including lease condensates, and the second largest producer of dry natural gas, the first being the United States.

According to data from the Federal Customs Service of Russia, more than 4.7 million barrels per day (b/d) of crude oil and lease condensate was exported in 2014. Europe is the main destination for the majority of Russia’s crude oil exports, accounting for 72 percent, with Asia second at 26 percent.

The majority of Russia’s crude oil comes from the West Siberia and Urals-Volga regions, in central and western Russia, but there has been an increase in production in the East Siberia and Far East regions. Oil fields in the east of Russia and the Russian Arctic may also play a role in future production, however the economic sanctions placed on Russia may delay new projects.

In response to Russian actions in Ukraine in 2014 a series of sanctions were imposed, by the United States and European Union, which led to reduced investment in the upstream sector. The sanctions limited the ability of Russian firms to access U.S. capital markets and prohibited the export to Russia of goods, services, or technology in support of deepwater projects, Arctic offshore projects, or shale projects.

With these sanctions in place practically all involvement by Western companies in Arctic offshore and shale projects stopped, making it unlikely that new Arctic resources will be developed. While the immediate effect of the sanctions has had little impact on Russian production, as these resources were not expected to begin producing for 5 to 10 years at the earliest, it is making it harder for Russian energy companies to finance new projects.

With more than half of the federal budget revenue coming from oil and natural gas production and exports, hydrocarbons are incredibly important to the Russian economy, accounting for 68 percent of Russia’s total export value in 2013. The international sanctions combined with the low world oil prices is putting pressure on the Russian economy.

For the EIA’s full analysis of Russia’s energy sector see the recently released Country Analysis Brief.

In related news, Serbian company Nis Petrol, a subsidiary of Russian group Gazprom, has received approval from the Environmental Protection Agency to resume the search for oil and gas in the Bihor county, in western Romania.

Nis Petrol had planned to search for hydrocarbons in Bihor two years ago but faced protests from environmentalists and residents who feared they were searching for shale gas. The company gave up the search, saying that some areas were overlapping with protected areas.

Now that Nis Petrol wants to resume the exploration, it still needs approval from the municipalities in addition to the Environmental Agency’s approval.

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