Russian Power

In 2012 Russia produced the equivalent of 26 million barrels oil per day spread between oil, natural gas, coal, nuclear and hydro electric power [1]. Just under 50% of that energy was exported, approximately 12.2 million barrels oil equivalent per day, mainly to western Europe and former Soviet republics who are heavily dependent upon Russian energy for their well being (Figures 1 and 4).

Leading up to and following the fall of the Soviet Union (1991) the Russian economy  declined for many years. The low point was 1998, the year of $10 oil. Since then the economy has recovered strongly, spurred on by growing production of oil, gas and coal and rising energy prices. However, whilst it remains a military superpower, Russia and its economy are not as large as many may believe. The population in 2012 was 143 million and GDP 0.980 trillion $ US (2005)[2]. Germany and the UK combined, by comparison, have a population of 146 million and GDP of 5.5 trillion $ US (2005).

The overview of energy, population and economy described below in 14 charts suggests that Russia is just getting back on her feet following the collapse of the Soviet Union 23 years ago. Personally, I’d feel more secure in Europe with a prosperous, friendly and internationally integrated Russia. Crimea was a part of Russia until 1954 when it was “gifted” to Ukraine by a Ukrainian [3]. The majority Russian population in Crimea have held a peaceful vote and have elected to rejoin Russia. Surely this does not warrant The West creating a major international and economic crisis from which everyone would lose?

Figure 1 During the Soviet era, Russia actually imported coal from the rest of The Union. It has since substantially reduced its own coal consumption, and, despite lower coal production today, has become a significant coal exporter, particularly to Europe. Total primary energy production declined leading up to and following the demise of the Soviet Union but has since recovered to match levels last seen in 1988 (Figure 2). A decline in Russia’s own energy use (Figure 3) has seen energy export volumes grow to record levels in 2012. No other country exports so much energy. [1]

Figure 2 Russian energy production has regained the levels reached during the heyday of the Soviet Union in 1988. [1] Production charts for oil, gas and coal are shown individually in the Appendix. Oil production has been rising only slowly since 2004 and this is one contributory factor to high global oil prices. Gas production has been on a plateau of about 500 million tonnes oil equivalent (toe) per annum since 1990 and it is not clear that this production level can be surpassed.

Figure 3 Russian primary energy consumption shows decline leading up to and following the collapse of the Soviet Union with stabilisation and slow rise following the nadir of 1998. Per capita consumption of 4.9 toe per annum in 2012 (Figure 7) is similar to the UK. [1, 2]

Figure 4 The bulk of Russian gas exports are via pipeline to Europe. Germany, Ukraine, Turkey, Belarus and Italy are the main destinations. In addition, Russia also has a Pacific Rim liquefied natural gas (LNG) train exporting 11 BCM to Japan and 3 BCM to S Korea in 2012. [1]

Figure 5 Following dissolution of the Soviet Union the Russian population began to decline, the result of migration, falling birth rate and falling life expectancy. GDP was already in steep decline in the lead up to dissolution and the nadir was 1998, the year of $10 oil. GDP has since recovered strongly on the back of rising energy prices and export volumes. At just under 1 trillion $US (2005) Russian GDP is still dwarfed by its OECD counterparts. For example, the combined population of Germany and the UK is 146 million, a little higher than Russia and the combined GDP is 5.5 trillion $US (2005), over 5 times that of Russia. [2]

Figure 6 The population pyramid for Russia [4] bears many hallmarks of an advanced society and an ageing population combined with some interesting features. The dearth of 65 year olds reflects low births around WWII. The great excess of women over men aged 70+ likely reflects male mortality during WWII. Note some women in the 100+ cohort. I’m not sure what the dearth of 40 year olds (births around 1970) reflects. Note how recent birth rates are recovering.

Figure 7 Per capita energy consumption of about 5 tonnes oil equivalent (toe) per annum is comparable with European peers. Per capita GDP of $6851 per annum is much higher than Egypt ($1643) but is well below that of European peers. [1, 2]

Figure 8 The elegantly simple relationship between GDP and energy consumption seen in Egypt [5] is more complex in Russia reflecting the collapse of the Soviet Union and a new growth trend based more upon free market principles. Russia produced $1413 of GDP for every toe consumed in 2012. This figure is lower than Egypt ($1528) and I’m guessing significantly lower than European peers. [1, 2]

Figure 9 Russia has historically run a trade surplus with the rest of the world. She has exported energy whilst manufacturing many of the consumer and capital goods that are used such as cars, planes, oil drilling equipment and rockets that take Americans to The International Space Station, etc. The cumulative surplus since 1990 amounts to a staggering 1.53 trillion $US and I imagine that it is this money invested in bonds of OECD countries that Russia is now scurrying to repatriate. [2]

Figure 10 Finally, I have added electricity consumption to the ensemble of charts and data since I believe that per capita electricity consumed may emerge as a proxy for how developed a country is. Russians currently consume about 7.5 MWh per capita per annum. [1, 2]

Appendix – individual oil, gas and coal production charts

Figure 11 In 2012 Russian oil production averaged 10.64 million barrels per day. Production is still rising slowly and has yet to attain the 1987 Soviet era peak of 11.42 million barrels per day. [1]

Figure 12 The history of gas production lacks the sharp post-Soviet fall in production seen in both oil and coal suggesting that Russia really pushed the boat out to maintain supplies to western Europe in the post-Soviet turbulent times. Gas production appears to be on a plateau since 2005. [1] It could be argued that this is demand related or it may be pipeline capacity related. The other option is decline in the supergiant gas fields – Urengoy, Yamburg and Medvezhye – is offsetting new capacity additions (See Figure 14).

Figure 13 The profile of Russian coal production is similar to that for oil. [1] The growth in Russian coal exports is based upon the decline in domestic coal consumption.

Figure 14 Russia’s west Siberian super giant gas fields have historically been the beating heart of Europe.


[1] BP: Statistical Review of World Energy 2013
[2] UN: National Accounts Main Aggregates Database
[3] Wikipedia: Crimea
[4] Wikipedia: Demographics of Russia
[5] Egypt – energy, population and economy

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18 Responses to Russian Power

  1. Hi Euan,

    Great set of graphs.

    “The West creating a major international and economic crisis from which everyone would lose?”

    People on the right in the US were predicting this at the time of the invasion of Georgia in 2008. The topic came up in both the 2008 (Sarah Palin, Ukraine specifically) and the 2012 (Mitt Romney, Russia generally) Presidential elections.

    However, in order to have prevented the takeover, there would have to been thoughtful planning starting in 2009 to meet the challenge by the Ukrainians, the EU, and Secretary of State Hillary Clinton. This didn’t happen. Mrs. Clinton’s failure, with her reset button, may be the most notable.

    Is Donetsk next?


    • Euan Mearns says:

      Dave, I doubt this land grab is over since Russian “majorities” throughout E Ukraine may well see a better future with Russia and will be impressed by the ease with which Crimea gained its “freedom”. Although, Crimea / Sevastopol has high strategic value to Russia.

      Ukraine and Belarus have provided a comfortable buffer between NATO and Russia. Both sides should have recognised this and both sides should have assisted these countries to prosper under neutrality.

      If Ukraine ends up being partitioned with the west wanting to join the EU and NATO then we could end up with NATO forces facing Russian forces across a barbed wire fence once again. I’d have thought both sides should be doing everything they can to avoid that scenario.

  2. Kit P says:

    Russia is not a military super power, you have to have these:

    There is big difference between projecting power and threatening weak neighbors by denying energy.

    • euanmearns says:

      It’s an interesting link and perspective. You only need 10 Nimitz class carriers if you want to conduct warfare thousands of miles away from home. Why on Earth would any country want to do that? It is noted that Japan does no longer have a carrier fleet since they are offensive and not defensive weapons.

      Ukraine has been receiving gas deliveries from Russia and has not been paying / been able to pay for them. Apart from that I don’t believe that Russia has been threatening to withhold energy exports – but western Europe is acutely aware of their vulnerability.

      • Kit P says:

        “Why on Earth would any country want to do that?”
        Maybe you should visit the graves of Americans buried in cemeteries in Europe and figure out the answer to your question. We paid dearly to ensure Japan and Germany could only have a defensive military. Fortunately Americans wiser than Euan knew that if we did not stop them over there we would be fighting them over here. Another reason to have a vastly superior military is so you do not have to fight at all. Keeping sea lanes open is important too. Finally the US military allows Euan to defend Putin. Somewhat ironic because if criticizing is not something Russians are free to do.

  3. Syndroma says:

    Another view on the comparative size of the Russian economy:

  4. Peter says:

    With the population chart being from 2010 and showing the drop offs for 49 to 45 year olds (1961 to 1965), I could imagine that the cuban missile crises ( + bay of pigs invasion etc), made Russians think a little before deciding to bring kids into the world.

  5. Phil Harris says:

    A very instructive series Euan, with nice comparisons with Egypt and even UK!

    For the record regarding Ukraine: the offer (perhaps ‘lures’) of future NATO membership as well as EU membership have been ‘in the air’ for a while. EU membership seems to me most unrealistic (cynical), and airing NATO membership positively dangerous, as you suggest. But that is what has been going on. (I spent 9 years off and on to 2006 in the agricultural sector in ex-communist countries, candidate for the EU. Some of those in the Balkans I know now will never make it.)

    One might wonder at the recent role of Victoria Nuland (F the EU, not F the West as one commenter put it.) She is wife to Robert Kagan, a founder of the earlier New American Century movement. The NAC crowd’s publications and fairly recent essay by Kagan are worth reading. High-risk, high-stake stuff IMHO.

    Apparently per capita income in the west of Ukraine is about half that in the east of the country (and in Kiev itself). Most existing industry sells into the Russian market. The fate of that industry under IMF help, could be problematic?

    You may be aware that there is a land grab been going on in FSU, with big-time purchase in Ukraine mostly from Western investment. For comparison, Ukraine cultivated soil is >6 or 7 times the cultivated area of UK for a population of 46m versus UK’s 63m. Previous geopolitical theorists, Adolf and Jo both thought that Ukrainian farming needed a bit of ‘investment’. Times have changed, but it is not a resource to be sneezed at!


    • Euan Mearns says:

      Phil, geopolitics is not my forte, but I have an interesting guest post tomorrow. I suspect this story is not over yet, especially if Russian Ukrainians really want to be a part of Russia. Interesting stats on land. I can only guess that western interests want to buy this to grow fuel. I thought it was interesting how Egypt had swapped suppliers from USA to Ukraine and Russia. It would be interesting to compare the yields per hectare between Ukraine and UK.

      Tiger tank running on bio diesel 🙂 Sounds like a good Green advertisement for exxon.


      • Phil Harris says:

        Good question Euan. UK wheat yields for example are some of the highest in the world. Ukraine winter wheat averages something usually over 3.0 tonne per hectare, compared with continental Europe at somehting over 5.0t/ha, and UK at over 7.ot/ha.

        The big Western investment was 2007 – 2009 and some companies such as the largest Swedish company seem to have caught a financial cold since then. Risks are higher in Ukraine because of risk of moisture deficit. Last autumn saw a 15% loss of the autumn wheat sowing, apparently.

        However, I read this recent assessment:
        “Grain prices in Ukraine were stable this morning after rising last week, UkrAgroConsult wrote in a daily report. Wheat prices jumped the most in 17 months in Chicago. Ukraine is forecast to be the world’s third-largest corn shipper and sixth-biggest wheat exporter in the 2013-14 season through June, based on International Grains Council estimates.

        “I haven’t heard any talk of interruptions to wheat exports,” said Arnaud Saulais, a broker at Starsupply Commodity Brokers in Nyon, Switzerland. “Markets are reacting positively and violently to the threats weighing on Ukraine.”


  6. Jonathan of Warwick says:

    As ever Euan – fascinating stuff. Thank you.

    Reference the discussion on wheat : Question to Phil / others – do we know what the Ukraine’s lower output per hectare is due to – historically you suggest ‘investment’; but is there any reason to think it might be expensive fertilizers – or expensive gas with which to make the fertilizers?

    Having been asking questions about the relationship between energy prices and food prices – I find myself on the fringes of some research at Warwick University (UK) looking at supporting improved decision making to avoid / manage a food crisis in the UK. If the European Ukraine is seen as a current / future bread basket – then I can now see Ukraine, as not just a NATO buffer to an aggrieved Russian people feeling disrespected by the West, but as an under populated region that might help stave off future hunger pangs – mmmmm.


    • Phil Harris says:

      I do not want to hog Euan’s site for what is a side issue to his interest, but Ukraine agriculture has been seen recently by the West as ‘undeveloped’. Previous peaks in output and yield occurred 1990 before the collapse of USSR. Recent investment (‘land grab’?) can go some way to fill the gap if export economics provide sufficient return for the foreign investor. There are downsides of course.
      I suggest you google – ‘ ukraine potential wheat grain production EU ‘ – and choose the Report EUR 26170 EN
      “Ukraine’s agriculture: potential for expanding grain supply. Economic and institutional challenges” you will see that soils agri-ecological potential is a good deal higher than that realised recently, and probably higher than 1990s.

      Similarly choose
      FAO Regional Office for Europe and Central Asia
      Policy Studies on Rural Transition No. 2012-4

      GB/UK on the other hand has not been able to feed itself since 1850, but bear also in mind for comparison that these days UK yields are near enough at theoretical maximum (average) for favourable areas in UK and have about doubled since I was a student. This is mainly new varieties able to utilise N (of NPK) application at circa 200kg per ha.

      The history of Ukraine agriculture back in the 1930s and earlier is something else!


  7. Alfred says:

    “… an under populated region that might help stave off future hunger pangs”

    Lebensraum? The Germans left lots of “fertilizer” behind after their last visit.

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