Russia’s economy is ranked 9th in the world in terms of GDP, 6th in terms of purchasing power and 3rd in terms of military spending. The country’s GDP was estimated at around 2.4 trillion dollars (FYE 2011) and a per capita income of 16 736 dollars (Index Mundi, 2012).
According to the 2012 estimates, the Russian population is believed to be over 140 million with an unemployment rate of 6 percent. An average Russia earns approximately over 640 dollars a month. Mineral fuel, oil, metals and timber represents over 80 percent of the country’s exports.
Despite of the increased energy prices, mineral fuel and oil only contributes 4 percent of the country’s GDP and the government expects a further drop in this figure (Index Mundi, 2012).
Russia is not only the largest county in the world but also the richest in terms of mineral resources. The country covers over 75 percent of the former Soviet Union territory. The country holds the largest natural gas reserves and is among the top ten in terms of crude oil reserves.
In addition, Russia is the fifth producer and the third largest exporter of coal in the world. In terms of coal reserves, the country is second only to the United State of America. Russia’s mineral fuels also include uranium which is used in the local nuclear power plant (Grama, 2012, p. 82).
Russia’s mineral fuel
According to the U.S department of energy, Russia’s natural gas reserve is about 50 trillion cubic meters. Most of the country’s gas reserves are located in West Siberia. However, Orenburg region and Komi Republic in the North also produces significant amounts of natural gas.
Russia is the second largest producer and exporter of natural gas in the world, contributing more than a third of the global natural gas export. Local consumption of the natural gas is about 70 percent. Therefore, local demand still allows for export. The country’s natural gas is mainly exported to Europe and Central Asia (Grama, 2012, p. 83).
Three natural gas fields, Yamburg and Urengoi and Orenburg, accounts for more than 79 percent of the country’s production. Natural gas production is mainly under the control of Gazprom Company. The Russian government is the main shareholder of the company with 39.89 percent ownership (Grama, 2012, p. 85).
With the discovery of new gas fields and increased capacity, Russia’s natural gas production is expected to increase by 890 cubic meters in 2020. The rising trend of natural gas production has enabled the country to meet its domestic demand and increase export (Levine, 2001, p. 11).
According to the U.S energy department, Russia’s oil reserve is about 7 billion metric tons. Major oil reserves are also based in the West Siberia basin (Tomsk, Tyumen and another 300 field), Ural basin (Volga field) and Pechora Basin (Timam field) (Matthews, 2008, p. 372).
In 1980s U.S.S.R was the leading global producer of oil, with Russia accounting for more than 95 percent of the overall production. However, the fall of the Soviet Union and other economic factors including unstable oil prices in the global market and the dominance of U.S dollar saw a sharp decline in the country’s oil production (Grama, 2012, p. 85).
Currently, Russia produces about 500 million tons oil per year and some experts argue that the country can afford to maintain the same capacity up to 2050 given their potential reserves. The country’s petroleum export is mainly crude oil. Russia crude oil export was estimated to be about 8.4 million barrels/day in 2011.
Major importers of Russia’s crude oil come from central Asia (China and Japan), Europe (former members of the Soviet Union) and North America (U.S and Canada).
The country’s total coal reserve is estimated to about 150 billion metric tons which is mostly brown and hard coal. There was a massive decline in coal production in the late 80s and 90s but the situation changed since 2000.The growth of coal production has surpassed the growth of petroleum and natural gas production.
Unlike oil and gas whose local consumption is over 70 percent, over half of the coal produced is exported. Ninety percent of Russia’s coal exports go to the European markets (Lawson, 2002, p. 8). Coal production is expected to increase with the depletion of oil and natural gas reserves in the future.
Even though the country has more than 20 coal basins, most of the coal produced comes from 7 basins. The country’s 7 major basins are Donetskii basin, Moscow basin, Pechora basin, Kansk-Achinsk basin, Irkutsk basin, Kuznetski basin, and South Yakutsk basin. The country’s coal is transported through railroad and sea (Rosner, 2010, p. 3).
Russia’s nuclear fuel is principally Uranium. However, the country also produces plutonium but in small quantity. According to the London Uranium institute, the country has over 200000 tons of Uranium reserves.
The country has only one uranium mining project and all of it is consumed locally. In other words, Russia does not export Uranium instead it imports more. The country has nine nuclear power plants with over 20 million kilowatt capacity (Levine, 2001, p. 9).
The bilateral relationship between Russia and Canada has increased significantly over the last decade (Government of Canada, 2012). Canadian exports to Russia have increased by 154.3 percent since 1998. The figure increased from 180 million dollars to over 1.58 billion dollars in 2011.
Most of the Canada’s exports to Russia include automobiles and parts, machineries, aircrafts and parts, and processed food. On the other hand, Russia’s export to Canada totaled about 1.35 billion dollars in 2011. Canada’s imports from Russia mostly include mineral fuels and oil, metals, gem stones, rubber and inorganic chemicals.
The trade relationship between these countries also includes service exchange. In 2011, Russia received 500 million dollars for services rendered and spent 260 million dollars for services received (Government of Canada, 2012).
According to Khondaker (2008, p. 2), Russia and Canada have become significant trade partners, even though trade between these two countries is still low compared with other countries. Russia imports largely manufactured goods from Canada.
On the other hand, its exports are mainly coal, crude oil and natural gas. According to Khondaker (2008), if not for mineral fuels, Canada would have registered a surplus of more than 700 million dollars in 2008 (p. 3). Mineral fuel represents 16 percent of the whole Canada’s exports from Russia.
Over the last ten years Canada has registered a trade deficit with Russia. The deficit was estimated to be about 1.25 billion dollars in 2008 (Khondaker, 2008, p. 4; Matthews, 2008, p. 372).
Russia is among the top global producers of petroleum, natural gas, and coal. The country’s mineral fuel and oil reserves are in billions of metric tons. The bilateral trade relations between Russia and Canada have considerably grown over the last one decade.
Russia import mainly manufactured goods from Canada and exports mineral fuel and crude oil. The trade balance between these two countries tends to favor Russia. However, mineral fuel and oil only contributes less than ten percent to the GDP.
Government of Canada. (2012). Canada Russia Relations. Web.
Grama, Y. (2012). The Analysis of Russian Oil and Gas Reserves. International Journal of Energy Economics and Policy, 2 (2), 82-91.
Index Mundi. (2012). Russia Economy Profile 2012. Web.
Khondaker, J. (2008). Canada’s Trade with Russia: 1998 to 2007. Canadian Trade Highlights, ISBN: 978-0-662-43652-2. Web.
Levine, R.M. (2001). The Mineral Industry of Russia. Journal of Geological Survey, 4 (1), 5-30.
Matthews, M.J. (2008). Energy competition and international relations, International Journal of Global Energy Issues, 29 (4), 371-376.
Lawson, P. (2002). An Introduction to the Russian Coal Industry. Charleston, West Virginia: Marshall Miller and Associates.
Rosner, K. (2010). Russian Coal: Europe’s New Energy Challenge. Climate & Energy Paper Series 2010.