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The petroleum or oil industry in Russia is one of the largest in the world. Russia has the largest reserves and was the largest exporter of natural gas.^[1] It has the sixth largest oil reserves, and is one of the largest producers of oil.^[2] It is the fourth largest energy user.^[3]

In 2009, Russia produced 12% of the world's oil and had a similar share of global oil exports.^[4] Russia produced an average of 10.83 million barrels (1,722,000 m³) of oil per day in December 2015.^[5]

In June 2006, Russian crude oil and condensate production reached the post-Soviet maximum of 9.7 million barrels (1,540,000 m³) per day. Exceeding production in 2000 by 3.2 Mbbl/d (510,000 m³/d). Russian exports consist of more than 5 Mbbl/d (790,000 m³/d) of oil and nearly 2 Mbbl/d (320,000 m³/d) of refined products, which go mainly to the European market. The domestic demand in 2005 was 2.6 Mbbl/d (410,000 m³/d) on average.^[6] It is also the main transit country for oil from Kazakhstan.

Until 2022 Russia was by far the world's largest natural gas exporter. Most, but not all, authorities believe that Russia has the world's largest proven reserves of natural gas. Sources indicating Russia have the largest proven reserves including the US Energy Information Administration (47.8 tcm),^[7] and OPEC (48.7 tcm).^[8]

Investment

As of 2008, the Russian oil industry claims to be in need of huge investments.^[9] Strong growth in the Russian economy means that local demand for all types of energy sources (oil, gas, nuclear, coal, hydro, electricity) continues to grow.^{[citation needed]}

Russia has seen extracting oil and gas from the Arctic region as important, especially for the Liquefied natural gas industry in Russia which was given a major boost from 2017 with investment and tax incentives, mainly to Novatek, however foreign investors pulled out in 2022 following the Russian invasion of Ukraine, with technology and key machinery essential for the operations coming under sanctions.^{[citation needed]}

Since 2022

The Russian invasion of Ukraine started with Russia restricting gas supplies to Europe to try to stop assistance going to Ukraine. It resulted in the closure of Nord Stream 1, the refusal to activate Nord Stream 2, the closure of the pipeline through Poland and the reduction of gas in the pipeline through Ukraine. It did not succeed and gave Gasprom severe economic problems.^[10]

Sanctions were imposed by the USA, the EU and other nations, to forbid or reduce the importation of gas, oil and associated products from Russia,^[11] including the introduction of a novel price cap on crude shipped oil, designed to allow Russia to maintain production but limiting the revenue from oil sales. From 5 December 2022 the price cap has been set at US$60 per barrel.^[12] This was followed in 2023 with sanctions and a price cap on Russian oil products, and the EU introduced sanctions on natural gas.

As part of the sanctions, an embargo of importing ship borne Russian crude and refined oil was introduced by the EU, G7 countries and Australia beginning in December 2022, with a few exceptions for a limited time period.^[13]^[14]

In May 2023 Lukoil completed the sale of its Priolo Gargallo refinery in Sicily, as it was no longer able to import Russian crude oil and the plant was configured to only process the Russian Ural grade oil.^[15] In October 2023 Bulgaria attempted to force Lukoil to sell its Lukoil Neftohim Burgas refinery.^[16]

A US Treasury report in May 2023 highlighted that Russian oil exports were continuing to rise, providing stability in the world market, as planned, whilst Russia's revenue was being restrained by the price cap to $5–6 billion per month, compared with $8–15 billion a month in 2022. Russia has changed their tax rules to levy more tax on oil producers to help offset falling revenue, to the detriment of investment. Market participants and geopolitical analysts now acknowledge that the price cap is accomplishing both of its goals.^[17]

Gas production in Russia has fallen, as gas exports which in 2021 were 185 bcm, have fallen in 2023 by around 70% with the loss of the European market.^[18]

Russia has sought means to get around the sanctions including investing heavily in hundreds of old tankers, to transport crude oil to new markets in the Far East, especially China and India, to replace lost European markets.^[19] G7 sanctions keep being adapted to restrict Russia's options and keep Russia's revenues below the $60 per barrel price cap level for crude oil whilst keeping the oil flowing.

In December 2023 the Russian government ordered oil and gas producers to install anti-drone protection at their installations, to ward off Ukrainian drone attacks.^[20] In January 2024, Ukrainian drone strikes hit at least four oil and gas terminals across Russia, including the Tuapse oil terminal on the Black Sea coast and the Ust-Luga oil terminal on the Baltic Sea coast. Ukrainian journalist Illia Ponomarenko said that "Russia finances its military from oil exports. You can't persuade countries like India and China to stop buying it. So you knock out Russian oil refineries."^[21]

Transneft, which pumps 90% of Russian oil, reported that 2023 crude oil exports were:

China via pipeline 40 million tons; no change
Black Sea via tankers 30m tons; +3.1%
Baltic Primorsk via tankers 44.4m tons; +6.5%
Baltic Ust-Luga via tankers 34m tons; +9.0%
Pacific Kozmino via tankers 42.8m tons; +9.4%
Druzhba pipeline to Europe −10m tons; -60.0%

Overall exports were down 6.5% in 2023 and over 90% of sales went to China and India.^[22]

Russia's oil refineries

Major oil refineries in Russia

Among these refineries, Perm Refinery, Kstovo Refinery, and Volgograd Refinery are privately owned by Lukoil,^[23] Yaroslavl Refinery is by Slavneft, and the rest are state-owned refineries.^{[citation needed]}

Russia's oil and gas companies

The biggest Russian oil company is Rosneft followed by Lukoil, Surgutneftegaz, Gazprom Neft and Tatneft.^[24] All oil trunk pipelines (except Caspian Pipeline Consortium) are owned and operated by the state-owned monopoly Transneft and oil products pipelines are owned and operated by its subsidiary Transnefteproduct.^{[citation needed]}

Bashneft (Russian oil refining company, one of the largest producer of oil in the country)
Gazprom (Russia's state-run natural gas monopoly)
Gazprom Neft oil company, subsidiary of Gazprom
Itera
Lukoil
Northgas
Novatek
Rosneft (State-owned Russian oil and gas exploration company)
Rusneftegaz
Russneft
Surgutneftegas
Tatneft
Transneft (Russia's pipeline monopoly)