This report highlights the unsustainable business model of Russia's oil industry, which heavily relies on oil exports, accounting for over 50% of the Russian federal budget and almost two-thirds of Russia's exports. While Russia is one of the top three global oil producers, its oil reserves are only the 7th largest in the world. The revival of Western Siberian oil fields under the Putin era has run its course, and maintaining production levels in these fields, already difficult for decades, is becoming increasingly difficult and costly. Exploration for new oil fields in Eastern Siberia has yielded limited success, and unconventional shale oil is expensive, requiring Russian oil industry to have the technological expertise. Auctions are increasing the limits of the Russian industry's ability to maintain production levels. In contrast, Russia's natural gas reserves are the largest in the world, but the challenge is to transport and sell it profitably. The rise of liquefied natural gas (LNG) shipping enables the monetization of reserves, which are abundant.
