NCPA - National Center for Policy Analysis

U.S. Watches Oil Games in Russia and Saudi Arabia

May 21, 2002

Russia has more oil than any country outside the sheikhdoms of the Middle East. That simple geological fact confers even greater geopolitical importance on the nation than it enjoyed prior to Sept. 11.

It has not been lost on anyone in the Russian oil establishment that 15 of the 19 suicide hijackers were from Saudi Arabia. And while the potentates of that country have promised not to use their oil as a weapon, the largely privately-owned Russian oil companies are gearing up to step forward in an emergency.

  • Russian oil production actually peaked in the late 1980s, at around 12 million barrels a day.
  • During the financially chaotic 1990s in Russia, production bottomed at six million barrels per day in 1996 -- but it has risen more than one million barrels per day over the past two years.
  • Russia now sells five million barrels of crude and oil products per day on the international market -- and that will grow.
  • Russia has 55 billion barrels of proven reserves -- compared with Saudi Arabia's 261 billion barrels.

Last November, the Saudi oil minister demanded that Russia play ball with OPEC and cut production -- which the Russians indignantly refused to do.

Russian oil is actually a constellation of asset-rich companies with very different opinions about the extent to which Russia should cooperate with OPEC.

The Saudis are said to be watching Russia warily. They want to make sure they continue to supply the U.S. with about 15 percent of its oil imports and not see its share slowly ebb away as more Russian exports come on stream over the next few years.

Source: Bill Powell, "Russia Pumps It Up," Fortune, May 13, 2002.


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