Russian Oil Supply: Performance and Prospects.

Russian Oil Supply: Performance and Prospects, by John d. Grace (Oxford: Oxford Institute for Energy Studies, 2005). 256 pages, cloth, $85; ISBN-10: 0-19-730030-8.

With crude-oil flows rivaling those of Saudi Arabia and crude-oil prices trading at levels well above $60.00 US per barrel

(WTI), the Russian Federation is, once again, poised to become one of the major players on global energy markets. At the same time conflicting reports from the Kremlin and Western media sources caution that the future direction that Russia's new role might assume is far from certain. In his book Russian Oil Supply: Performance and Prospects, James Grace gives us a unique perspective from which to view the complex and often confusing world of Russian foreign- and domestic-oil policy.

Perhaps the most important contribution of this book is an in depth analysis of Russia's physical-supply capacity. Grace provides the reader with an eloquent exposition of the evolution of the Russian crude-oil industry from its modest beginnings in Baku and the Apsheron Peninsula to Vladimir Putin, and the now infamous Khodorovsky affair. Foreign involvement, from the Nobel Brothers and the local refinement of crude oil to kerosene to the NEP of the Lenin years, is treated in careful, and colorful detail.

Whether cause or effect, the rise and fall of Russian crude-oil flows often followed that of its leaders. The demise of the Romanov dynasty was accompanied by the signs of depletion of Russia's two largest supergiant oil fields. Discoveries in Kazakhstan, Turkmenistan, the Caucasus, and eventually Western Siberia foreshadowed the unprecedented successes of the Soviet Union. The collapse of production from the largest Siberian oil field--Samatlor--accompanied the collapse of the Soviet Union. Perhaps not surprisingly, the year 1988 marked the last year of peak production from the USSR and the final year of the Soviet government itself.

Grace highlights the key role of the Russian Federation's first independent government, the Yeltsin administration, in the determination of current and future crude-oil flows. While the regime itself did not survive, it was successful in liberating the Russian crude-oil industry from a complete dependence on state budgets and five-year planning targets to a slightly more competitive industry that would be forced to rely on crude-oil supplies to domestic and foreign markets. "It is this institutional innovation that will play the largest role in determining future supplies and the least likely to be reversed." [p. 3]