U.S. Overtakes Russia in Gas Output

Ariel Cohen / February 04, 2010

As Bloomberg reports, during 2009 U.S. natural gas output grew 3.7 percent to an estimated 624 billion cubic meters (bcm), while the Russian production dropped by 12 percent to an estimated 582 bcm. So much for Russian plans to become an energy juggernaut.

Russia is still a major player in global energy markets and aspires to leverage its resources to become a global energy superpower. It is the largest supplier of natural gas to the European Union and is using this dependence as a foreign policy tool to drive wedges between European capitals and between Europe and the United States. The Kremlin’s strategy seeks to increase dependence by locking in demand with energy importers, consolidating the oil and gas supply under Russian control by signing long-term contracts with Central Asian energy producers, and securing control of strategic energy infrastructure in Europe, Eurasia, and North Africa. Russia’s strategy also involves extending the Gazprom monopoly to create an OPEC-style gas cartel and increasing cooperation with OPEC.

Russia still outperforms Saudi Arabia – and any other country on the planet as the largest producer and exporter of oil and gas. But the Gazprom’s production decline is a cautionary tale of government mismanagement of natural resources, opacity and corruption. In the Heritage’s Index of Economic Freedom 2010 Russia came 143rd, behind Haiti, but ahead of Vietnam. (more…)