Faisal, found the link… But this is the one where they regained the second spot, and the 1st spot as an energy producer, ill try to get the other one too…
http://www.dawn.com/2002/02/03/ebr12.htm
Russia regains leading place on world energy map
By Syed Rashid Husain
DHAHRAN, Feb 2: The global energy equilibrium is changing. Russia, over the last few years has regained its position as a potent force on the global energy map.
It is now only second to Saudi Arabia, the world’s largest oil exporter. The change in the equilibrium is going to have profound impact on the world oil market, many here in Dhahran, the virtual global energy capital believes.
Despite the recent agreement between the Organization of Petroleum Exporting Countries (Opec) and Russia over the issue of cut in production, to stem the downward trend in oil market prices, analysts fear that compromise could only be a short lull in a long confrontation.
Many here believe “compromise” that has resulted from this trial of strength between Opec and Russia is far from a solution to the fundamental problem that divides the two sides over production levels and the market shares.
The problem arises from the fact that, after nearly nine years of decline Russia is determined to regain the leading place it used to enjoy on the world energy map. According to Julian Lee of the London based Centre for Global Energy Studies, the recent increase in Russia’s oil production have mainly come from Russian oil companies, which have benefited greatly from the high oil prices of 2000 and 2001.
“The additional income from the higher oil process was invested back into the mainstream oil industry resulting in the increased output. Despite the calls, there seems to be little investment from the foreign oil companies in the Russian oil sector. They still find the investment climate in Russia unattractive,” Julian Lee, CGES specialist on Russian oil affairs, told Dawn in reply to queries about the state of Russian oil industry.
In the late 1980s, Russia was world’s leading oil exporter and its production reached a high of 11.4 million barrels per day (bpd) in 1987-88. In the space of nine years, its output plunged by 44.6 per cent, dropping to just 6.2 million bpd in 1996, before recovering to 6.5 million bpd in 2000 and 7.1 million in 2001. The expected figure for 2002 Russian output is 7.35 million bpd in 2002, estimated Julian Lee.
Energy analysts believe the recovery in global market oil prices during the last two years, the reorganization of the Russian oil sector launched in 1992-93 and the devaluation of the ruble - Russian currency, made this significant increase in Russian crude output and hence export feasible.
Given that over 85 per cent of oil and gas investments took place in the ruble, the devaluation of the currency enabled the Russian companies to reduce their costs by 50 to 75 per cent. In the case of Lukoil, for instance, its production costs expressed in foreign currency thus fell from $7.40 to $2.70 per barrel.
In the recent years Russian companies have spent a lot of money developing new production capacity and the resistance to any output cut from the Russian oil industry was because these companies now want to start earning returns on these investments. Also it was difficult to shut-in production in Siberia, particularly during winter, without running the risk of losing it altogether; pumps seize up, wells close and it could be very expensive to bring them back into production again.
“Also the Russian oil companies can produce their oil profitably at $17 per barrel prices, experienced towards the end of 2001. It was for this reason also that the Russian oil companies were strongly against any Russian output cut, as was demanded by the OPEC,” Julian Lee emphasized.
In the coming years Russia would stay as a major player in global oil market, at times competing against Opec with fiercely divergent interests. Its proven crude oil reserves are currently put at over 48 billion barrels, while “remaining reserves” are estimated at 137-147 billion barrels. In addition to that, recoverable reserves remaining to be discovered amount to some 77 billion barrels of crude oil and 40 billion barrels of condensate, according to the United States Geological Survey (USGS).
Because of recent improvements undertaken to modernize the face of the Russian oil industry and other initiatives currently underway, it is more than apparent to the analysts here that Russia would remain the world’s largest oil producer and exporter after Saudi Arabia for a good many years to come.
This is why some analysts believe that equivocal compromise announced with Opec more looks like a short lull in a long showdown that could see many rebounds in future.
Another factor worth considering in this direction is that the rapprochement between Russia and the United States in the aftermath of the September 11 attacks has opened way to close cooperation between the two states in areas such as the participation of American oil companies in the development of the Russian hydrocarbon industry and the export of oil and gas from Central Asia. This would give an unprecedented boost to the fortunes of the Russian oil industry.
Consequently, many believe that a coordinated output policy between Russia and the Opec may not be that simple and the equation will become even less so with the expected increase in Russia’s oil production and exports in the coming months and years. Opec in future may have to take the Russian sensitivities more in account before taking any initiative in the oil market, analysts strongly believe here.