Via Stratfor (subscription required), an very insightful analysis of Gazprom’s new Yuzhno-Russkoye oil and natural gas field, due to come on line Dec. 18. However, as the report points out, even this 805 billion cubic meter field will not stem the overall decline in Gazprom’s natural gas production, highlighting the seriousness of the supply crunch in the near future, and reminding the world once again of the long-term implications that the structure of Russia’s petroleum industry has upon future output.As the article notes:

“…The western Siberian field, located in the Yamal-Nenets autonomous area, contains proven reserves of 805 billion cubic meters (bcm) of natural gas and 5.7 million tons (42 million barrels) of oil. The field is expected to reach an output of 25 bcm of natural gas annually by 2011 and would be the main feeder of the proposed Nordstream pipeline project, although it is also perfectly able to feed into Russia’s existing supply and export network. The field development is a joint project between Gazprom and German firm BASF.

While the size and projected annual output of Yuzhno-Russkoye are considerable, the field is incapable of stemming the slow decline of Gazprom’s natural gas supply…

The problem is that aside from Yuzhno-Russkoye and the mammoth 3.3 trillion cubic meter Zapolyarnoye superfield, Gazprom has not brought any new fields online since 1991. The other three major fields in Western Siberia — Urengoy, Yamburg and Medvezhye — with reserves of 16 trillion cubic meters of natural gas among them, already account for 70 percent of Gazprom’s natural gas production. The fields already online are also past peak output.

….The dwindling natural gas supply might not be able to support all of Gazprom’s commitments. Gazprom currently is relying on the Central Asian states, particularly Turkmenistan and Kazakhstan, to pick up the slack in production. However, those countries’ ability to increase production in part depends on Gazprom’s commitment to investing in transportation infrastructure linking Russia to Central Asia — not exactly a high priority for the Russian natural gas giant. This also assumes that the Central Asian states are not shopping around for other export routes (which they most certainly are).

…The main question, however, remains how to replace the dwindling supply of natural gas. The problem is that as an absolute monopoly, Gazprom is the only entity in Russia even remotely interested in correcting the supply problem. Gazprom’s grip on the production of natural gas chokes off potential expansion. Even if a field for another company to exploit were to magically appear, Gazprom has a complete monopoly on natural gas transport and export. In fact, the Russian Duma approved a law in July 2006 that made Gazprom’s monopoly a federal law, dispelling any notion that its control of supply, production, transportation and export could be threatened….”