Plans for Russian strategic oil reserves on hold, no decision in sight

The Russian government recently announced plans for the creation of strategic oil reserves, similar to those in the U.S. However, both the Energy Ministry and the Finance Ministry suggest to postpone the final decision until late 2010.

The Finance Ministry believes that the project is financially not viable under the current circumstances, while the Energy Ministry wants to await the results of a study concerning the options for underground oil storage.

Two plans are currently on the table for the creation of strategic oil reserves. The first is to create spare production capacity, which would require 'freezing' production at some major oil fields. The second option is to construct underground oil storage facilities in the vicinity of major oil pipelines.

EEO Focus: Strategic oil reserves are traditionally used to guarantee oil supply in times of supply crises. Oil storage facilities, however, are also used by states to try to influence global oil markets. This is especially the case for the U.S.