THE WALL STREET JOURNAL: Oil’s Inverse Proportion
COMMENT FROM breakingviews
April 16, 2008; Page C18
Russian oil production declined in the first quarter of 2008 after several years of rapid growth. That isn’t surprising; an oil industry characterized by capitalism, foreign partners and technology has given way to autarky and state control. Globally, countries closing resources to foreign participation are the principal threat to oil supplies.
After 2000, Russia was the principal source of new oil outside the Middle East. But since 2003, the most efficient Russian oil company, Yukos, has been dismembered, contracts with efficient foreign operators such as Royal Dutch Shell have been forcibly renegotiated, and Russia has imposed an 80% tax on revenue after the first $27-a-barrel price. Unsurprisingly, exploration activity has slackened and production may have peaked. read more
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