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Since revenue from its energy sector gives Russia its geopolitical strength, reports of declining oil production will be bad news for Moscow in the very long term. (With Stratfor map)

The Russian Energy Ministry on Oct. 2 released its oil production figures for September, indicating that oil production fell for the ninth straight month. Oil production fell 0.4 percent in September compared to the same period last year, to 9.83 million barrels per day (bpd). If this decline continues — and it most certainly will, since output normally contracts during the winter due to the lack of river shipping options — for the rest of the year, it would be the first time since 1998 that Russia has experienced an annual oil production decline.

Russia has the world’s eighth-largest proven oil reserves (60 billion barrels) and is the world’s second-largest producer (9.83 million bpd) and exporter (7 million bpd), after Saudi Arabia. Russia’s energy exports (and particularly its position as the main natural gas supplier to Europe) account for roughly 20.5 percent of its gross domestic product and generate 64 percent of its total exports, allowing the Kremlin to amass an emergency surplus fund of approximately $750 billion. It is the revenue from its energy sector — mainly natural gas, but also oil — that has allowed Moscow to resurge on the world scene by challenging the West in Georgia and Ukraine and potentially even globally. In short, Russia’s energy sector is the main source of the Kremlin’s contemporary geopolitical power.

The news of the potential annual decline in production is therefore troubling for Russian long-term force projection — if not necessarily an issue for the immediate short term — particularly because it comes two years before most experts predicted Russian oil production would begin to stagnate, let alone decline. If the decline is not just an isolated blip on the radar and is a continuing trend, then Russia eventually could begin facing problems in sustaining its current level of geopolitical activity into the late 21st century.