Photograph by: Gerd Ludwig, National Geographic June 2008
Under communist rule, the U.S.S.R. was a major oil producer, with western Siberia providing most of the supply. Soviet production peaked in 1988 at around 12.5 million barrels per day (bbd), two-thirds of which came from western Siberia. Just before communism collapsed in 1991, oil production began falling, bottoming out in the mid-1990s at a little over six million bbd. Not until the late 1990s did production take off again.
Today western Siberia still produces about 70 percent of Russia's oil, and the province of Khanty-Mansi lies at the heart of the boom. All of Russia is reaping the benefits, but nowhere are the effects of the bonanza more obvious than in Khanty-Mansi cities like Surgut, Nefteyugansk, and Khanty-Mansiysk, the province's capital—all of which have been transformed by new investments in housing, commerce, arts, and science, among other areas.
Current Russian oil production, about ten million bbd, hasn't reached the levels of the late 1980s, but oil prices have increased tenfold over the past decade, giving the Russian government, which seized control of a number of oil fields from various oligarchs in the mid-2000s, a steady flow of revenue. And despite its lower production rate, Russia is now the world's top producer of crude oil and the second largest exporter of total oil products (behind Saudi Arabia). But the Russian government's tactics in managing its oil fields have made foreign investors wary and could pose a problem for the future of Russia’s oil economy.
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The Russian government has been negotiating with Chinese authorities to build a pipeline to move crude oil from eastern Siberia to Russia's Amur Province on the Chinese border. Part of the 1,680-mile (2,700-kilometer) pipeline—operated by Transneft, a government-owned company with one of the largest networks of oil pipelines in the world—may be open by late 2009, and when it reaches full capacity, it's expected to transport 600,000 barrels of oil a day.
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A 2008 list of the top 1,000 billionaires in the world included 87 Russian citizens, five of whom were earning more than $20 billion annually. A fifth of the Russian billionaires were oil or gas tycoons. Some of these oligarchs have been accused of tax evasion and fraud, a few have been linked to murder, and others are rumored to have ties to the mafia. Yet other Russian billionaires have shown a philanthropic side, spending tens of millions of dollars—or more—on Russian artworks, particularly Russian icons, and donating them to the state. Some have established foundations or charities, some have contributed to city infrastructure projects. U.S. museums and other organizations have also benefited from these oligarchs' financial donations.
"The World's Richest People: Billionaires 2008." Forbes (March 24, 2008).
Finn, Peter. "A Rich Market for Russian Icons." Washington Post, February 5, 2008.
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Last updated: May 13, 2008