According to the Oil and Gas Journal, Russia has proven oil reserves of 60 billion barrels, most of which are located in Western Siberia, between the Ural Mountains and the Central Siberian Plateau. Approximately 14 billion barrels exist on Sakhalin Island in the far eastern region of the country, just north of Japan. In the 1980s, the Western Siberia region, also known as the ?Russian Core,? made the Soviet Union a major world oil producer, allowing for peak production of 12.5 million barrels per day in 1988 (most of which came from Russia). Following the fall of the Soviet Union in 1991, oil production fell precipitously, reaching a low of roughly 6 million bbl/d, or around one-half of the Soviet-era peak (see Fig. 1, data). Several factors are thought to have caused the decline, including the depletion of the country's largest fields due to state-mandated production surges and the collapse of the Soviet central planning system.
A turnaround in Russian oil output, which many analysts have attributed to the privatization of the industry following the collapse of the Soviet Union, began in 1999. The privatization clarified incentives and increased less expensive production. Higher world oil prices (oil prices tripled between January 1999 and September 2000), the usage of technology that was standard practice in the West, and the rejuvenation of old oil fields also helped raise production levels. Others attribute the increase in part to after-effects of the 1998 financial crisis and subsequent devaluation of the ruble.
