In 2010 the Russian oil industry set an absolute record in terms of production. An oil pipeline to China has been launched this year expanding our potential of oil supplies to Asia. Diversification of export routes seemed to be quite a reasonable strategy on the background of growing production. Moreover, the demand of Asian states for energy sources is the most impetuous. Chinese and Indian economies are booming with their population getting richer, which contributes to fast increase in energy consumption in the region.
However, there are certain factors that should be taken into account. Despite a huge number of optimistic scenarios of the Russian oil and gas sector development, the situation is far from being optimal. Production may reach its peak already in 2011 to 2012; further growth is under question. Oil firms complain more and more often of taxation procedures and demonstrate willingness to make investments outside Russia actively entering production projects in various parts of the world. In this situation diversification looks as redirection of deliveries of hydrocarbons from the European to Asian markets, which turns it into a political project. As a result, division of Russian elites into pro-West and pro-Asia camps is becoming more apparent.
The situation in the gas sector is quite similar. A new gas accord with China was promised to be signed in June. But this did not happen, although negotiations continue. Since among new major projects only the Bovanenskoe deposit can boast a final investment decision, there is quite a logical question about the resource base of future supplies to the PRC. It is indicative that only the Altai project is being negotiated; this pipeline is to link old deposits of the Nadym-Purtazovsky district with China. The deposits already cater for the EU market, while China stubbornly refuses to pay a European price.