Russia Overtakes Saudi Arabia, US As The World’s Oil Titan
Russia’s status as the world’s top producer of oil and lease condensate comes as the country’s economy is being hampered by low oil prices and sanctions from the U.S. and its allies over the conflict in Ukraine. Sanctions from Europe (which makes up 72 percent of Russia’s export market) could continue to bite down on Russia’s government finances.
News of Russia’s oil dominance comes as President Vladimir Putin’s government resubmits its claim to the United Nations over large swaths of the Arctic shelf which could potentially hold one-quarter of the world’s undiscovered oil and natural gas reserves. Tapping into Arctic oil could ensure that Russia stays on top for years to come.
The U.S. Energy Information Administration (EIA) notes that “production in East Siberia and Russia’s Far East regions has increased, and oil fields in eastern Russia and in the Russian Arctic stand to play a larger role in the country’s future production.” But a lot of these new projects have been delayed “or otherwise affected by economic sanctions currently in place,” according to EIA.
Sanctions have been severely limiting “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,” EIA notes.
“These sanctions have halted virtually all involvement in Arctic offshore and shale projects by Western companies,” EIA states. “Without such involvement, new Arctic resources are unlikely to be developed. Although this has little immediate effect on Russian production, the sanctions, along with the low world oil prices, have made it more difficult for Russian energy companies to finance new projects.”
But it looks like Putin is willing to play the waiting game when it comes to Arctic hydrocarbons, and is beefing up Russia’s military presence in the North Pole to increase the legitimacy of its claim to the region. The Arctic has become a centerpiece of Putin’s administration.
“The constant military presence in the Arctic and a possibility to protect the state’s interests by the military means are regarded as an integral part of the general policy to guarantee national security,” said Sergei Shoigu, Russia’s defense minister.
Russia may be the world’s largest oil producer, but it still lags behind the United States when it comes to natural gas production. The U.S. remained the world’s largest producer of natural gas, thanks to hydraulic fracturing of shale, while Russia lagged behind in second place.
Also, in terms of petroleum and liquid fuels production, the U.S. is also the leader. In 2014, the U.S. produced nearly 14 million barrels per day of liquid fuels while Russia only produced nearly 11 million barrels per day — putting them in third behind Saudi Arabia.