Big Future in Small Change

Breakup of Yukos hits output in Russia

It’s often the small changes that indicate trends of profound importance for the future.

Russian oil production is no longer increasing, and it seems as if the next few years will bring no change in this respect, with the risk that there will even be a decline thereafter.

The reason is that old production fields are starting to mature and decline, and that there hasn’t been enough investment in either transportation infrastructure or in the opening up of new production fields.

This is not likely to change in the near term. With the Kremlin determined to control more and more of the oil sector, few foreign investors are likely to rush in. The Yukos affair has been a watershed for Russia.

The geopolitical implications of this are immense. If there a few years ago was the hope that we could start reducing our dependence on oil from the Middle East by relying more and more on Russia, this no longer seems a viable option.

The problem is that there are hardly any other viable options. The growing appetite of a growing global economy – not the least rising Asia – will have to be meet by increasing production around the Persian Gulf.

Our global dependence on this volatile part of the world is set to increase in the years ahead. It’s not an entirely comfortable prospect.

6 Responses to Big Future in Small Change

  1. Anonymous skriver:

    Maybe Iran would offer oil in exchange for know-how to build a long distance rocket or something like that.

  2. simulev skriver:

    Iran already have it. It’s called Shahab 3. If they can arm it with nuke warheads is another questionmark.
    Btw Israel has a good defense for that in the Arrow-system. Perhaps Israel can sell EU such defense technology. Or maybe not.

  3. Sven K skriver:

    The Arrow-system seems to handle Scuds well, but haven´t been tested on Shahabs. Shahab-6 with boosters might threaten Europe and the rest of the world. Since North Korea and Iran are partners in this business, they might share nuclear technology. We should be prepared for the worst, if diplomacy fails, or rather before that considering the suicidal pattern of both ideologies.

  4. Martin Börjesson skriver:

    This drop on the production side is alarming. I have written a small text about the uncertainty on the future of oil consumption, and especially in China on my blog which underscores how serious this could effect the global balance.

    Critical uncertainties in oil consumption forecasts?

  5. The Master skriver:

    In response to the reasoning of future oil consumtion and price one could logically assume that the impact on national security and balance of power in the world will be changed for sure.
    The speed of the change is impacted by the price of oil iself – higher price on oil – lower/slower growth due to higher productions costs for low cost countries like China as of course for rest of world aswell. In the medium term the balance of power will shift to benefit the oilproducing companies/countries like Yukos/Russia, whole middle east etc all with more or less hidden agendas. These players/places are and has been for many years the target of the smart companies/countries to establish a footprint in. This will in turn even more than today push for increased focus on developing the alternative energy sources – that research, which to a large extent the developed countries are leading already today. In the long term the balance of power will be benefitting the country/company that patents the most/best solutions on alternative energy sources. The race is on..

  6. The Master skriver:

    In response to the reasoning of future oil consumtion and price one could logically assume that the impact on national security and balance of power in the world will be changed for sure.
    The speed of the change is impacted by the price of oil iself – higher price on oil – lower/slower growth due to higher productions costs for low cost countries like China as of course for rest of world aswell. In the medium term the balance of power will shift to benefit the oilproducing companies/countries like Yukos/Russia, whole middle east etc all with more or less hidden agendas. These players/places are and has been for many years the target of the smart companies/countries to establish a footprint in. This will in turn even more than today push for increased focus on developing the alternative energy sources – that research, which to a large extent the developed countries are leading already today. Oil producing countries are defenetely not focussing on this at the moment. So in the long term we are back to the old truth: the balance of power will be benefitting the country/company that patents the most/best solutions on alternative energy sources. The race is on..

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