JasonC

Russian Oil Exports: Dropping, But Why?

The production curve of any individual oil well shows a steep drop from the time it is drilled. Production is maintained by continually adding new wells to the fields. That takes reinvestment in the industry.

In Russia, reinvestment in the energy sector is severely hampered by its ownership structure - nearly all state owned. The incentive for the political class is to skim off as much as possible for their other uses, treating the whole thing as a cash cow. Not to build for long term capacity.

When foreign majors came in to invest in their fields, the state let them and then took the resulting assets with minimal compensation.

Thieves are lousy capitalists. Bottom line.