OIL EXTRACTION (PRIMARY SECTOR)

CASE STUDY I RUSSIA

The oil industry was born in Russia, and it became

one of the pillars in which the Russian economy still
stands.

The world’s first oil well was drilled on the Absheron

Peninsula near Baku way back in 1846. This turned
the world’s attention to Russia in order to satisfy its
own oil needs. In the early 20th century, Russia
emerged out to become one of the world’s top oil
producers, occupying about 30% of the market.

Russian oil industry which was flourishing, was hit

by the revolution of 1917, civil war and
nationalisation of the oil companies. But despite the
hit Russia continued to gain foreign capital. In 1923,
the situation normalized, and the oil export
returned to its former levels.

The increase in the Soviet oil export had led to the

decline in global oil prices. This was one of the
reasons for the establishment of the organisation of
the petroleum exporting countries (OPEC) in 1960.

In the 1980s, the soviet petroleum industry entered

a period of decline. There were two reasons for such
a decline:
 * Depletion of existing wells due to extensive
drilling

* Lack of investments in the exploration of new

deposits.

The soviet began to face a serious crisis with the fall

of the industry. The domestic demand , export
possibilities and drilling volumes all reduced. The
state in order to overcome the crisis, began
demonopolization and privatisation of the industries
which led to the establishment of oil giants covering
the full cycle of production – from exploration to
export. The crisis was overcome in 1997, when the
production volumes were restored.

Today Russia, is among the world’s oil market

leaders. The Russian government is taking serious
measures to avoid the dependency of the economy
on oil.

The current prime minister of Russia, Dmitry

Medvedev says:

“The central task today is to create a highly effective and

high-tech economy. Such economy will generate backbone
revenue streams, and that will help us to be less dependent
on oil incomes.”
https://www.rbth.com/business/326217-black-gold-how-russian-oil