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On the Cost of Lost Production from Russian Oil Fields

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  • James L. Smith

Abstract

Russia is now paying heavily for past mismanagement of its major oil fields. Unconventional attempts to maximize short-run extraction, neglect of routine maintenance, and shortages of critical equipment have combined to cause a steep decline in production. This study examines the scope and size of resulting economic losses using an extension of the traditional exponential decline model. Estimates derived from the model indicate that as much as 40% of the potential value of Russian oil reserves has been lost through poor management.

Suggested Citation

  • James L. Smith, 1995. "On the Cost of Lost Production from Russian Oil Fields," The Energy Journal, , vol. 16(2), pages 25-57, April.
    • Handle: RePEc:sae:enejou:v:16:y:1995:i:2:p:25-57
    DOI: 10.5547/ISSN0195-6574-EJ-Vol16-No2-2
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    References listed on IDEAS

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    1. Adelman, M A, 1990. "Mineral Depletion, with Special Reference to Petroleum," The Review of Economics and Statistics, MIT Press, vol. 72(1), pages 1-10, February.
    2. Leslie Dienes & Istvan Dobozi & Marian Radetzki, 1994. "Energy and Economic Reform in the Former Soviet Union," Palgrave Macmillan Books, Palgrave Macmillan, number 978-0-230-37715-8, December.
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    Citations

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    Cited by:

    1. Okullo, Samuel J. & Reynès, Frédéric & Hofkes, Marjan W., 2015. "Modeling peak oil and the geological constraints on oil production," Resource and Energy Economics, Elsevier, vol. 40(C), pages 36-56.
    2. Smith, James L., 2014. "A parsimonious model of tax avoidance and distortions in petroleum exploration and development," Energy Economics, Elsevier, vol. 43(C), pages 140-157.
    3. Smith, James L., 2013. "Issues in extractive resource taxation: A review of research methods and models," Resources Policy, Elsevier, vol. 38(3), pages 320-331.
    4. Mr. James L. Smith, 2012. "Modeling the Impact of Taxes on Petroleum Exploration and Development," IMF Working Papers 2012/278, International Monetary Fund.
    5. Stevens, Paul, 1997. "Increasing global dependence on Gulf oil: `This year, next year, sometime, never?'," Energy Policy, Elsevier, vol. 25(2), pages 135-142, February.

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    More about this item

    Keywords

    Lost oil production; Russia; mismanagement; exponential decline model; oil field rehabilitation;
    All these keywords.

    JEL classification:

    • F0 - International Economics - - General

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