Russia’s oil industry in decline, executive concedes

The Associated Press

Russia’s oil industry is no longer in a position to drive the economy forward, a top oil executive conceded Jan. 9.

For years, the Russian economy has been dependent on the oil industry, which has provided the county with its largest source of foreign currency and has led to big deals with foreign partners.

However, a drop in world oil prices last year sent Russia’s economy reeling, ultimately contributing to the economic crisis that began in August, when the government effectively devalued the ruble and defaulted on foreign debts.

Konstantin Potapov, vice president of the Sibneft oil company, said Jan. 19 that the outlook for the industry remains gloomy, the ITAR-Tass news agency said.

Speaking at a news conference in Omsk, about 2250 kilometers (1,400 miles) east of Moscow, Potapov said Sibneft’s output declined 4 percent in 1998 and its refining operations were cut back by 18 percent. He also said the company had suspended several projects with foreign partners.

He said he saw no likelihood of stability in the industry in the next two years.

Also Saturday, ITAR-Tass reported that the Khabarovsk regional government in Russia’s Far East had agreed to allow the U.S. company Exxon Neftegaz Ltd. into a project to build a gas pipeline from Sakhalin Island to China, and an oil terminal at the port of De Kastri, on the Russian mainland.