Commodity OnlineMOSCOW: Crude oil production in Russia, the world's second largest oil supplier after Saudi Arabia, is falling. Rising production costs and maturing fields have led to the biggest fall in oil production in Russia, since 1998.
According to figures released by Russia's Energy Ministry, production fell 0.4 percent to 9.83 million barrels of crude a day (40.2 million metric tons a month) compared with a year earlier.
Output in Russia's oil heartland of western Siberia is flagging as older fields mature and companies invest in harder- to-reach regions to tap deposits. In July, parliament approved tax breaks championed by Prime Minister Vladimir Putin to spur investment in national production.
Total exports fell 10 percent year-on-year to 5.14 million barrels a day. Exports via OAO Transneft, the country's crude oil pipeline operator, slid 9.1 percent to 4.13 million barrels a day from last year.
Russia's sliding crude export duty, which rises when oil prices are higher, leaves less money to develop harder-to-reach deposits. Putin said in May taxes took as much as 80 percent of profits.
Russia's oil reserves, said to be around 48.6 billion barrels, are estimated to support booming oil exports for decades to come. Saudi Arabia holds some 261.8 billion barrels.
According to information made public by Russia's five largest oil companies, they control more than a combined 70 billion barrels of proven crude oil reserves.
LUKOIL and YUKOS, the two largest companies by market capitalisation, claim to control 14.576 and 12.581 billion barrels of crude respectively.
Most estimates include only Western Siberian reserves, exploited since the 1970s and supplying two-thirds of Russian oil, and not potentially huge reserves elsewhere.
To maintain its industry, the International Energy Agency estimates that Russia will need $550-$700 billion of investment in energy infrastructure by 2020.
