President Putin is back, but this time he faces daunting challenges on the energy front.
The easy times throughout the 2000s when prices were rising, production was steady, and petro-dollars kept rolling in, are gone. Russia is facing steep depletion rates on key oil fields in East Siberia, the Far East and West Siberia, a dynamic that has already seen the country slip back to second place on the international roster of oil producers behind Saudi Arabia. The only chance Putin has to retain his long term global energy stake is successful exploitation of Russia’s Arctic reserves, but that’s going to need serious foreign investment. The good news for Putin is that international oil companies have welcomed the initial ‘policy certainty’ his return has brought to the Kremlin, but if Russia wants to attract serious amounts of foreign capital, Moscow also needs to display very long term consistency.