Michael Bradshaw asks whether Russia, for all its economic growth, is too dependent on natural resources. Read the World Economic Forum’s report: Scenarios for the Russian Federation.

What would Russia do in the case of sharply declining energy prices? That is the question most often asked about Russia’s energy dependence. Yet an even more pressing concern is whether Russia might lose out even if energy prices remain high in the coming decades.

This is one of my personal insights shared with the World Economic Forum’s Scenarios for the Russian Federation , released during the Forum’s 2013 Annual Meeting in Davos, and in which I have been involved over the past 12 months.

How could Russia miss out on high oil prices? After all, Russia has about 6% of the world’s proven oil reserves, and about 24% of the world’s proven gas reserves and it remains the world’s biggest exporter of natural gas. In 2012, Russia even overtook Saudi Arabia as the world’s largest oil producer, providing 12% of global oil production.

At the same time, this rebound in production over the last decade has come about largely thanks to a combination of oil left in the ground during the 1990s when the economy was in crisis, and the application of enhanced recovery technologies that increased production in existing fields.

More recently, production gains have come from new fields, such as the Shell-Gazpromneft joint venture at Salym; Rosneft’s Vankor field; and new fields in East Siberia. These latter fields were facilitated by the construction of the Eastern Siberia Pacific Ocean pipeline.

But many of the legacy fields in West Siberia are now well past their peak. Maintaining Russia’s oil production at 10 million barrels a day is going to require a significant amount of new investment in West Siberia, East Siberia, and offshore in the Arctic, Black Sea and Sea of Okhotsk.

Not only will substantial investment be needed to extend infrastructure, but the demands of frontier production will also require technology and experience that can only be acquired through collaboration with the International Oil Companies (IOCs).

So where is this money and expertise going to come from?

The answer may be found in the Russian government’s recent change of heart in relation to the role of foreign investment in the domestic oil industry. Agreements have been struck with the likes of Exxon-Mobil, Total, ENI, and, most recently, between Rosneft and BP in relation to TNK-BP.

We should keep in mind however that these agreements are at the very early stages of exploration and only time will tell if they can deliver the production needed to sustain output such that Russia can continue to benefit from high oil prices, still over US$100 a barrel.

As Scenarios for the Russian Federation does well to highlight, the energy risks to Russia’s economy are more numerous than you might think.

Author: Michael Bradshaw is Professor of Human Geography at the University of Leicester.

Image: The Slavneft-YANOS oil refinery, Yaroslavl, Russia REUTERS/Maxim Shemetov