American relations with Russia has dominated the news lately. Whether we like it or not, it looks as if our relationship with Russia is about to strengthen over the next few years–especially with former Exxon-Mobil CEO Rex Tillerson as the new Secretary of State.
With that said, we thought it might be fun to look back on the development of Russia’s oil industry over the years. And we went way back–all the way to the 1800’s.
In 1872, during the time of the tsars, Russia auctioned off its oilfields to private companies. This was a good thing, as oil production and technological breakthroughs increased dramatically over the next few decades.
In fact, by the early 20th century, nearly one-third of Russian output was dominated by Swedish, French, and British firms. The Russia of the late 1800’s proved much more open to foreign investment than the Russia of today.
However after the rise of the Soviet Union in 1922, oil policy started to take new directions. There was a state committee for the oil industry in Soviet Russia that handled decisions, as the country became virtually self-sufficient in terms of energy.
Before World War 2, Russia saw incredible leaps in oil output from 11.7 million tons in 1928 to 21.4 million tons by the mid 1930’s. Decades later, their dependence on oil production served them well during the 1973 oil crisis–which led Russia to engage heavily in foreign trade with Europe and Japan, who needed the valuable resource.
However, after the collapse of the Soviet Union in the 1990’s, Russian petroleum production had trouble rebounding. By the mid 1990’s they exported just 6 million barrels per day, just half of the numbers they were doing in 1988.
Despite these hard times, the Russian petroleum industry rebounded in the 2000’s. By 2011 they were the largest oil exporter in the world, producing 10.5 million barrels of oil per day. Right now, the future looks pretty bright for Russian energy.