‹ Countries Russia Last Updated: November 26, 2013 (Notes) Overview Russia is the second­largest producer of dry natural gas and third­largest liquid fuels producer in the world. Despite its significant reserves of coal, it produces only modest amount of coal. Russia's economy is highly dependent on its hydrocarbons, and oil and gas revenues account for more than 50% of the federal budget revenues. Russia is a major producer and exporter of oil and natural gas, and its economy largely depends on energy exports. Russia's economic growth continues to be driven by energy exports, given its high oil and gas production and the elevated prices for those commodities. Oil and gas revenues accounted for 52% of federal budget revenues and over 70% of total exports in 2012, according to PFC Energy. Russia was the world's third­largest producer of oil (after Saudi Arabia and the United States) Preliminary data for 2013 show that Russia still is the third­ranked producer of total liquids, with average production at 10.5 million barrels per day (bbl/d) through September 2013. Russia was the second­largest producer of natural gas in 2012 (second to the United States). Russia is the third­largest generator of nuclear power in the world and fourth­largest in terms of installed capacity. With ten nuclear reactors currently under construction, Russia is the second country in the world in terms of number of reactors under construction in 2012, according to the International Atomic Energy Agency. Russia consumed 32.77 quadrillion British thermal units (Btu) of energy in 2011, the majority of which was in the form of natural gas (56%). Petroleum and coal accounted for 19% and 14%, respectively. Source: CIA, World Factbook Oil Russia was the third­largest producer of liquid fuels in 2012, following the United States and Saudi Arabia. During that year, liquid fuels production averaged 10.4 million bbl/d. Russia's proven oil reserves were 80 billion barrels as of January 2013, according to the Oil and Gas Journal. Most of Russia's resources are located in Western Siberia, between the Ural Mountains and the Central Siberian Plateau and in the Volga­Urals region, extending into the Caspian Sea. Eastern Siberia holds some reserves, but the region has had little exploration. In 2012, Russia produced an estimated 10.4 million bbl/d of total liquids (of which 9.9 million bbl/d was crude oil), and it consumed roughly 3.2 million bbl/d. Russia exported over 7 million bbl/d in 2012, including roughly 5 million bbl/d of crude oil and the remainder in products. Russia's pipeline oil exports fall under the jurisdiction of Transneft, the state­ owned pipeline monopoly. Exploration and production Most of Russia's oil production continues to originate in West Siberia, notably from the Priobskoye and Samotlor fields. The Sakhalin group of fields in the Far East only contributes about 3% of Russia's total production, although it has yet to fulfill the expectation that it would contribute significantly to Russia's total oil production. In the longer term, however, Sakhalin, along with the untapped oil reserves in Eastern Siberia and the Russian Arctic, may play a larger role. Several international oil companies are actively working in this area. The Russian sector of the Caspian Sea and the undeveloped areas of Timan­Pechora in northern Russia also may hold large hydrocarbon reserves. A number of new projects are in development, but these new projects may only offset declining output from aging fields and not result in significant output growth in the near term. The use of more advanced technologies and the application of improved recovery techniques are resulting in increased oil output from existing oil deposits. Fields in the Western Siberian Basin produce the majority of Russia's oil, with developments at Rosneft's Samotlor and Priobskoye fields extracting more than 1 million bbl/d combined. Production in the region is dominated by Russian firms, although foreign companies, notably Shell, have secured access to production in Western Siberia. The potential oil reserves of Eastern Siberia, the Russian Arctic, the northern Caspian Sea, and Sakhalin Island are attracting attention. A number of international oil companies have secured acreage and are investing heavily in exploration and development on hydrocarbon­ rich Sakhalin Island, although the Russian government is pushing for a greater role for domestic companies in these projects. Gazprom acquired control of the Sakhalin­2 project from Shell, and it is seeking control of the marketing of gas supplies from the Sakhalin I project, led by Exxon Neftegas Limited, a subsidiary of ExxonMobil. Russian companies are also expanding into the Arctic and Eastern Siberian regions, spurred on by tax holidays and lower oil export tariffs. While several new fields have come on line since 2009, bringing additional fields into production will take time and may require a reformed oil tax regime from the government. Russia's oil production by region, 2012 Region Thousand bbl/d Western Siberia 6,422 Urals­Volga 2,312 Krasnoyarsk 368 Sakhalin 283 Komi Republic 259 Arkhangelsk 249 Irkutsk 201 Yakutiya 133 North Caucasus 64 Kaliningrad 26 Total 10,317 Source: Eastern Bloc Energy Russia's oil and gas producing regions West Siberia West Siberia is Russia's main oil producing region, accounting for around 6.4 million bbl/d of liquids production, nearly two­thirds of Russia's total production. While this region is mature, West Siberian production potential is still significant but will depend on improving production economics at fields that are more complex and that contain a significant portion of remaining reserves. The two largest oil fields in West Siberia are North Priobskoye and Samotlor, which account for about 20% of West Siberian production. Urnegoy is the largest gas field in the region. Other large oil fields in the region include Mamontovskoye and Salymskoye fields. In addition to well­established oil fields, a number of wet gas developments in Western Siberia are under way. It is likely that gas condensate volumes from these fields will grow within the next few years as a result of these developments. Urals­Volga Urals­Volga was the largest producing region of the Soviet Union until the late 1970s, when it was surpassed by Western Siberia. Today, this region is a distant­second producing region, accounting for about 22% of Russia's total output. The giant Romashkinskoye field (discovered in 1948) is the largest in the region. It is operated by Tatneft. While the field reached its peak production level sometime in the late 1970s, it likely will continue to produce until at least 2030, according to Wood Mackenzie. Urals­Volga is home to a number of other fields, although their average size is relatively small at about 140 million barrels of recoverable liquids, according to Wood Mackenzie. A significant portion of the oil produced in this region is heavy. East Siberia With the traditional oil­producing regions in decline, East Siberian fields will be central to continued oil production expansion efforts in Russia. The region's potential was increased with the inauguration of the Eastern Siberia­Pacific Ocean (ESPO) pipeline, which created an outlet for East Siberian oil. A total of 400,000 bbl/d of crude oil was supplied to the pipeline in its first year of operation. The region's development was spurred by tax breaks and the removal of export duties, but most of these concessions were lifted in 2011. East Siberia has become the center of production growth for Rosneft, the state oil giant. The start­up of the Vankorskoye (Vankor) oil and gas field in August 2009 has dramatically increased production in the region and has been a significant contributor to Russia's increase in oil production since 2010. Vankor, located north of the Arctic circle, was the largest oil discovery in Russia in nearly three decades. In 2013, the field has produced about 430,000 bbl/d. There are a number of other fields in the region, including the Verkhnechonskoye oil and gas condensate field, Yurubcheno­Tokhomskoye oil and gas condensate field, and Agaleevkoye gas and condensate fields. Yamal Peninsula/Arctic Circle This region is located in the Yamal­Nenets Autonomous region and it straddles Western Siberia. This region is mostly known for gas production. Crude oil development is relatively new for the region. In the near term, the region is facing transportation infrastructure constraints, although the construction of the Purpe­Samotlor pipeline ameliorated some of these constraints. Transneft also is constructing the Zapolyarye­Purpe pipeline, that will connect the Zapolyarye gas and condensate field to the Purpe­Samotlor pipeline. The pipeline will come online in three phases, the first of which is expected to be completed by the end of 2014. In addition to the Zapolyarye gas and condensate field, the area is home to Vostochno Messoyakha and Zapadno Messoyakha, Suzun, Tagul, and Russkoye oil fields, all of which will benefit from the additional transportation availability. On the Yamal Peninsula itself, gas fields such as Yuzhno Tambey, Severno Tambey, and Khararsavey dominate the landscape, as well as the Vostochno Bovanenkov and Neitin gas and condensate fields. North Caucasus North Caucasus is a mature region that consists of a number of small fields. LUKoil has been actively developing some of the deposits situated in the North Caspian, such as the Yurii Korchagin, launched in 2010. Other discoveries in the area include the Khvalynksoye, Rakushechnoye, Sarmatskoye, and Zapadno Rakushechnoye fields. The development of the region is highly sensitive to taxes and export duties, and any change or cancellation of tax breaks may negatively affect the region's development.