Don,

My statement about Russia having the largest oil reserves and being the largest oil exporter was not something I picked up out of thin air. It was from a talk to the Institute of Pipeline Engineers given by the former Saudi Arabian Petroleum Minister Sheikh Zaki Yamani. In which he addressed the emergence of the Russian Federation with, "It's extremely vast energy supplies", on the world market. Proven oil reserves in Russia total about 50 billion barrels and gas reserves equating to approximately 40% percent of the worlds gas reserves. These reserves will be significantly enhanced with investment in modern oil and gas technology, particularly in the areas of reservoir engineering, transportation infrastructure and exploration.

Russia's peek oil production in 1988 under the Soviet regime amounted to approximately 500 million metric tons per year - that equates to roughly 11.4 million barrels a day. The intervening years saw a brief decline, which is currently and rapidly being reversed. Those years have also seen the opening up of Russia to precisely the type of investment and application of modern technology that Sheikh Yamani was talking about.

Traditionally Russia's export market for oil and gas was to the eastern European countries of the Waraw Pact. Those markets still exist and their energy requirements as they catch up to the West are expanding. Russia supplies western Europe with something like 25% of its natural gas needs, that market is also expanding. Russia is now free to sell its oil and gas to the world market, and it is acknowledged as being in a position to counter OPEC. Production costs in Russia currently run at just around $1 per barrel, to fuel the Russian economy under its modernisation programme requires a stable oil price of around $21 per barrel. For quite sometime now oil has been retailing in the range of $25 - $32 per barrel. The Saudi's also require a price of around $21 per barrel but their production costs are higher than Russia's. For this reason, there is not one major player in the oil and gas industry who has not shown great interest in Russia. To those investors Russia represents a vast country and with regard to reserves and they have only just barely started to look for it.

If that is thin air to you pal - start investing in it.