Russian Peak - Reloaded  

Even as Russia is predicted to become the world's largest oil producer this year, a number of commentators are starting to believe that Russian production is about to peak for the second time.

OPEC is struggling to add large amounts of extra capacity, especially as Iraq continues to disappoint. Plus the extra oil OPEC says it has is all 'heavy crude,' more expensive to refine into petroleum.

As a result, non-OPEC suppliers such as Russia are becoming increasingly important. The IEA estimate that in 2006 Russia will match Saudi Arabia as the world's largest supplier of crude oil onto the market. They say that Russia will supply 9.91 million barrels per day (mbpd) onto the market place, a 4.1% increase from this year. In turn the Paris-based group estimate that Russian supply growth will increase this year by 3.7%. All of which follows final figures for 2004, which saw production soar by 8.7% or 740,000 bpd.

In other words, the IEA figures claim Russia's supply growth has slowed in 2005 from 2004, yet say it will once again increase next year. As a pointer, a more detailed look at the IEA's figures show that Russian output for May was 9.36mbpd. Yet in the fourth quarter of 2005, the IEA estimate that Russia will average 9.78mbpd, a prospective output rise of 420,000bpd. Is this just wishful thinking?

Kevin Norrish at Barclays Capital is an analyst who is starting to question the future of Russia's output.