The wages for oil and gas in Siberia

As Leanan and jjhman have noted, the discontent over profit distributions in the oil business appears to have hit Russia with workers in Surgut, in Siberia, previously praised by President Putin, now complaining about the way that they are being paid.
Under the system, one of the harshest in the oil industry, only 30 percent of wages are fixed. The other 70 percent consists of bonuses that can be taken away at any time, depending on an employee's performance, Zakharkin said by telephone from Surgut on Thursday.

"Low wages, fines and boorish behavior" by managers are the bane of the workers' lives, Zakharkin said, adding that the protests' aim is simply to get a hearing with the company.

Worsening conditions are affecting morale, Zakharkin said. "How will they raise birth rates if people are crestfallen and feeling depressed?" he said, in a reference to the government's plan to combat demographic decline.

At present the article quotes the average salary as being some $630 a month, although they are asking for a 50% raise. This was disputed by a company spokeswoman
"We all want a better salary," said Raisa Khodchenko, a company spokeswoman. "I also want to go the Bahamas and the Caribbean every year."

She said workers' wages were raised by 20 percent in January and would be raised by another 20 percent in October. The fixed part of salaries was 38 percent, not 30 percent as the workers claimed, she said.

The average salary is about 28,000 rubles, ($1,040) per month and workers lost bonuses for good reasons, Khodchenko said.

These salaries are quite a bit less than those being made in the gas fields being developed by Gazprom where salaries up at the edge of the Arctic Circle are significantly higher.
"Working for Gazprom is considered prestigious." The company bills itself as the "Pride of the Nation."

The Communist Party's state socialism dissolved nearly two decades ago, but Gazprom's corporate paternalism softens the rigors of life in a region the locals refer to simply as "the North." While the average Russian worker makes $350 a month, gas field technicians here take home up to $3,000. Roadside billboards proclaim "Glory to the gas workers!" Nationwide, Gazprom has 330,000 employees.

Workers in Novy Urengoy live with their families in apartment blocks painted shades of blue, pink, and yellow. Gazprom covers 97% of the cost of running 14 kindergartens, charging employees only 100 rubles, or $4, a month for child care. It provides interest-free housing loans, free medical care, and heavily subsidized overseas vacations.

The Business Week article has another interesting view on what might be the future prospects for Gazprom and the Russian President.
Dmitry Medvedev, another member of the St. Petersburg clique and chairman of Gazprom's board, also serves as Putin's first Deputy Prime Minister.

Gazprom's political heft would be underscored if, as is rumored in Moscow, Putin becomes CEO after stepping down from the presidency in 2008. (Putin has denied any such plan.) Medvedev, meanwhile, is widely seen as a leading candidate to replace his boss as President in two years.

The article also points out the rapid gasification program that it going on in Russia and the considerable savings that will come from the switch for Russian consumers, since they pay a considerably lower rate than foreign consumers.
By the end of 2006 all nine of Kalyazin's heating plants are to be converted to gas from fuel oil, which sells for about $280 a ton. The equivalent amount of gas--1,000 cubic meters--costs just $93 for industrial users and $56 for residential ones. Consumers will pay just over a dollar each month for gas to power their stoves, compared with $4.50 for bottled propane.

Electric bills will decline sharply thanks to the fact that residents will no longer have to use electric water heaters. "I'm proud of it because it's our Russian company," local hotel manager Irina Zhupanova says of Gazprom. "For daily life, of course [gas] is a big plus," says resident Elena Chertovskikh.

With Gazprom board chairman Medvedev maneuvering ahead of the 2008 presidential election, Russia is gasifying furiously. Kalyazin is one of 1,120 towns and villages the company has promised to hook up under its 2005-2007 program. The miracle of gas is to be bestowed on 60% of all Russians, compared with 53% in 2005.

At the same time Gazprom continues to spend its profits on acquiring other company assets, in the latest case shares in Gazprom Neft the oil company, which Yukos had owned. The price appears to be about a third of the value of the shares, from the article, but when you have as much control of the Russian energy business as Gazprom is now acquiring then I guess the rules change.

At the same time the growth in domestic consumption that is apparently currently in progress, can only give a bit more concern to those in the West who are going to be increasingly dependant on natural gas supplies from Russia, where investments in the developments of new deposits seem to be taking second place to other interests.

I saw a little item in the Dallas paper that claimed that one dealer in Russia is currently selling more Hummers than in all of Western Europe.  Granted, I can't imagine that too many people are buying Hummers in Western Europe, but the point of the story was the Russian dealers can't keep Hummers in stock.  I think that Russian car sales are up by more than 15% year over year.  Note that Russian oil exports are reportedly falling.
I have seen comments before that Russian oil exports are reportedly falling. Where does one get data on this? How good is the data about overall Russian oil production?
In Russia roads are bad and gas is some $0.50. If I were a russian and earned $1000+ I would want a Hummer too.
This is $0.50 per litre which is some $1.90/gal
Gas is 50c/liter only in Western Siberia. The other places enjoy a somewhat higher price around 70 cents for a liter of the regular unleaded gas equivalent
50c/liter sounds like a bargain to me.  Right now in Quebec prices are 1,144$ a liter.  I remember 10 years ago, going to University of Moncton, a 12 hour drive, to pay gas 56 or 58c a liter, no less.

So I guess they are subsidizing gas a litle bit.

I've just read an interesting article on Russian oil production on the Raymond James web site, sub section 'Energy Stat of the Week'

In summary, it says that Russian oil production is stagnating and " it does not appear that there will be substantive improvements in 2007 and beyond" despite significant increase in rig count.

This is off topic, but I just listened to the 3rd hour of the Financial Sense broadcast. Puplava was detailing the proposed Amero currency which will replace the US dollar when Mexico, the US and Canada are joined in an arrangement similar to the European Union. Supposedly this is being worked on outside of the legislatures of any of the countries. The eventual plan (possibly by as early as 2010) would be for citizens of any of these countries to be able to work and live anywhere within the union. This does explain the lack of interest in preventing the illegal immigration from Mexico. Should this play out, the implications are pretty staggering for anyone currently in the American middle class, along with the likely negative implications for governmental responses to post-peak conditions. Anyway, I thought it was very interesting so you might like it.
Brian T,

Thanks for posting this story.  I became aware of this situation about a year and half ago and have since read everything I could get hands on to understand this plan.  For decades now, the MNCs have been working behind the scenes with their political and media lap dogs to implement this far reaching agenda.  

A North American Union and borderless continent would make implementation of a sustainable free-market system unlikely given the weakening effect this would have on the ability of citizens to adopt practical solutions in their own communities and own states.  This is due to continental regulations and laws decided by the "council" that are expected to overrule any and all local laws and regulations.  

The likelihood of balkanization of cultures will also make the job of getting a continental consensus of the electorate virtually impossible.

BrianT - Im thinking that Amero currency is a red herring to distract from real objective of legitimizing US access to Canadas natural resources instead of Canada selling them to China.
What is this, some sort of conspiracy theory?  Something is being worked on "outside the legislatures of any of the countries"?  So, basically why even worry about it?  All kinds of crap is being worked on by private parties and most of it won't come to anything.  Seriously, if the Illuminati were controlling everything from the shadows, I dare say things would not run as badly as they do.  We probably wouldn't be running headlong into an energy crisis with no plan or awareness of it whatsoever.  No one would want to combine Mexico and the US into one country because it would result in complete societal collapse.  The US economy couldn't support all the workers from Mexico and we'd have a little problem with not all speaking the same language.  Even the rich don't benefit from a country in anarchy.  It costs a lot of money to have to hire your own private army.  As conspiracy theories go this is about as far fetched as they come.  
Don't be so dismissive of a new paradigm.  Just think about how many Americans have been bamboozled into thinking Peak Oil is just a "conspiracy" of either oil companies or environmental extremists.  Ask yourself why something so important as Peak Oil would be virtually ignored by the mainstream media and not addressed in a meaningful way by any past or present POTUS or the U.S. Congress.

It is not only possible the power elite are trying to eliminate our borders, it is in the works right now.  The principle backers are the members of the Council on Foreign Relations, of which most high ranking politicians are members of or affiliated with.  This goal is supported by both the neoconservatives and neoliberals.  

Get informed.  Start by reading several books on the history, process, and goals of globalization.  I must have read 40 books and hundreds of analyses by political scientists and historians to understand what was happening and why.

Although not a scholarly text, I found Crossing the Rubicon very illuminating in its probing of the corruption and scheming that goes on regularly by high ranking pols and CFR members.  Rubicon's author, Michael Ruppert, may seem to jump to conclusions but his work as an investigative journalist is topnotch.  Historian Kevin Phillip's new book American Theocracy is also good primer on the hubris of our political elite and how their reckless behavior has made peak oil a much more dangerous proposition for us all.

We have a de facto open border policy now with the biggest supporters being the corporatocracy led by none other than G.W. Bush.  It is quite obvious that if you crack down on business hiring of illegal immigrants then you effectively close down the borders.  So, we don't need a conspiracy theory to see what is clearly out in the open for all to see.  


Nagorak: 1. No mention of Illuminati on the program 2. There would still be 3 distinct countries sharing a common currency and security perimeter. Goods and people/employees would flow without restrictions through this zone 3. The persons proposing this arrangement do not foresee anarchy, just lower wages and a more efficient business environment 4. The big highway discussed on TOD is part of the plan.  
The WTO and World Bank have effectively operated as non-democratic international institutions for many years now.

The WTO is pretty well know for over-riding local democratic governmental regulations and such, is it not?

And plans for significantly altering the relationships between the three NA countries have been in the works for some time as well, I believe, and supported by WTO.

This CFR document on "Creating a North American Community" might be a place to start investigating.  

Sorry to continue the off-topic tanget -- this might be a good topic for a seperate post or to take to Drumbeat.

And now, back to Siberia!

Bryan, when starting a completely new thread, you should not do it by clicking on Reply to a totally unrelated thread. After all, your post has nothing to do with that post and is not a "reply" to it at all. You should go to the top and click on Post a Comment.
I didn't mean to confuse you. Sorry.
Jhewitson, thanks for this link. They say that to expect a 3 to 5% growth over the next three years would be overly optimistic. However they say they do not believe Russia has peaked:

Accordingly we do not believe Russian oil production has already seen its all-time peak (which is more than we can say for Mexico and Iran).
Russia HAS seen its all-time peak in 1987. The second (lower) peak is expected in 2008. On a seasonally-adjusted basis the output grew 0.2% in May and fell 0.1% in June. Russia is entering the bumpy production plateau when the new production coming onstream is being offset by the declines in the output from the old oil deposits.
What is the best source of data on Russian oil production? Are the EIA figures as good as any?
You will be surprised, but there is no data on Russian oil production starting January 2005. From that point on, the Rosstat has been publishing only the monthly all liquids figure in tonnes per month. I do not know where the EIA gets its data, but the IEA simply plots the Rosstat figures here after converting them from tonnes per month to mbd: Submit=Submit
Corrected figures for each month become available on the 26th of the following month and these data are plotted here on the upper graph along with the previous 12 months in thousand tonnes per day:
Does anyone know what the current best estimate is for inflation in Russia?  It would be interesting to know if, like U.S. workers, Russian's wages are losing ground due to inflationary pressures.

Since it appears that Americans are on the threshold of hyperinflation, this will necessarily translate into U.S. workers increasingly disgruntled over inadequate pay raises.

This discontent by Russian oil workers is just a harbinger of things to come.

P.S. A big clue to rank and file Americans that inflation was about to take off should have been the Fed's decision to stop releasing M3 data.


Russia's central bank has well learned the twist of so called consumer inflation. Officially last month inflation is reported around 8.5%. But GDP deflator is around 20%.
The inflation is more discernible if one compares the prices in US$. Five years ago 1 square meter of average apartment in new housing blocs in the outskirts of Moscow costs $600-700. Today the price is $4000-4500.
This is true. The Russian CPI does not include the prices of residential property and rents. If it included, the inflation would be 15% a year. Otherwise, it is about 9%.
Well, the Americans don't count a real estate bubble as inflation either :-)
Well, at least by now it is over, but you cannot say the same about Russia.
It's very hard to construct a scenario where indebted consumers are not getting pay rises and we have hyperinflation. If people don't have more money in their pockets and they have debts in an environment of increasing rates how do you get hyperinflation?
The same way people reach conclusions of worldwide die-off because Zimbabwe's agricultural industry and infrastructure is falling apart.  It doesn't take a leap of logic if you don't bother using logic in the first place.  
That said, pointless snarky comments aside, an inflationary scenario is not at all unlikely as a result of higher energy prices.  It seems like we'd have a good chance of getting stagflation.  I agree that hyperinflation is harder to envision without accompanying wage increases.  
You're correct.  My hyperinflation terminology was an overgeneralization due to limited space on this type of forum.

Let me restate my position.  Escalating fossil fuels prices have the potential to rapidly inflate not only energy prices but also those goods and services most directly dependent on ff - and that's a lot of g&s.

The potential for a weakened or collapsing dollar will magnify the problem for American consumers.

Some economists say that we have been in stagflation for several years but this has been masked by the deflated prices of goods from overseas, principally China.  If energy and commodity prices soar, combined with higher  transportation costs and a weakened dollar, then those cheap Chinese products may not be so cheap anymore.

A deep recession based on rapidly inflating ff prices could well bring a strange mix of high inflation and deflation (e.g. much lower housing prices from a burst housing bubble).

Hang on to your seat belts, folks.

Hi Southpaw,

I agree that stagflation is likely. I think we already have mild/early stagflation in the major economies but the numbers are distorted by the way the data is manipulated, primarily:

  • substitution. i.e. one type of meat has gone up in price so lets make the consumer substitute that with a different cheaper meat and hence that is not inflation.

  • hedonistic pricing. i.e. this product has gone up but we won't count that because it is presumed to be a better quality product.

The GDP is deflated by a figure that tends to be even lower than the manipulated inflation figures. So if you manipulate inflation down you are simultaneously manipulating GDP growth up. Hence the governments pretend inflation is less than what most people experience AND growth is higher than most people experience. It will be interesting to see, as the situation worsens, if and how they will continue to lie about it.


Inflation is relatively unimportant for skilled individuals, of which there are a significant shortage in Russia across all sectors.  G&A costs are still low by western standards so Russian businesses are generally willing to raise wages of skilled employees ahead of inflation.  Indeed the balance has probably swung too far in favour of pay vs skill/ability.

More importantly for a very significant portion of Russians their personal disposable income (PDI) is around 70% of take home AFTER paying off credit cards, mortgages and other debt.    recent study suggested that the purchasing power of an avergae Muscovite (note that Moscow is a country-in-country) is in excess of the average Swede.

Indeed as GDP per capita is rising faster than ex-real estate core inflation it looks as though domestic (natural) gas prices will be allowed even faster than the current regulated tarrifs - and then you really will have a gas crisis in W. Europe as this post from an alter ego Russian bloggger highlights.

An average Swede does have a considerably smaller disposable income than an average Muscovite, but do not forget that first, the cost of living in Moscow is higher than in Sweden, and, second, that almost all the rich Russians live in Moscow due to the fact that they have to be close to the federal government.
These people are really getting screwed. They have skills and work in a dangerous environment producing the worlds most critical commodity which has risen dramatically. If there were free movement, can you imagine the number of Russians that would be working on oil rigs in Texas, Oklahoma, Louisiana, Wyoming ect?

The supply of experience people is clearly inadequate onshore U.S.A. The operator of a number of properties I have small fractional interests in has recently given his key employee a fairly significant piece of the action just to make certain that he does not entertain better offers.

Read Charles Henry Dana on how the people who managed the water canals were treated in old Los Angeles - they pretty much ruled the roost, they managed the water!

Those who manage the oil can expect to call the shots in our dead dino "civilization'.

sounds like you need to buy some wells, Fleam.
I have to disagree. I am working for a Canadian drilling company in the technical support department and I have not seen any Russian righands. Unlike the US, Canada is literally luring oil workers from Russia, but not too many came so far. Also remember, that the salaries are quoted after tax.
Here is a comparison. A motorhand working a Gazprom rig in Western Siberia 2 weeks on then 2 weeks off nets about $2500 a month. For what I know, the other Russian companies pay between $1300 and $2000/month for the same work. A motorhand working in Wyoming gets something around $24 an hour. With the same work schedule and 150% hourly rate for the overtime, this works out to around $5050 gross or just under $4000 net monthly income. So, the difference is about 2 times. Do not expect to see a lot of Russian righands in the US.
Let's have a thread about this bloody heat!

We're breaking new records for heat AND for energy consumption every day, tomorrow supposed to be even hotter and Monday hotter/even more energy use since it will be back to work for us proles.

Blackouts in southern San Jose, people keeling over due to heat, huge energy consumption, and tons of people on the road, even though it's a Spare The Air day.

Talkers on the radio demanding to know why, "they" made SUVs etc etc and caused global warming, how come "we" can't crank up the AC? Apparently no consciousness that "we" are "they". Aircon unit sales and usage are huge right now.

I've only been in the Bay Area 3 years so I'm not hoary old timer, but this heat is unlike anything I've experienced. And this heat is being experienced all over the US and I believe the world (not much gets through the censorship curtain, sorry, to readers outside the Evil Empire).

This is worthy of a thread..............

How about starting a "Heatwave" thread in Drumbeat?

Weather underground reports that the highest temp ever for LA was reported July 22 -- 119 degrees.  

Looks plenty warm in Russia, but that's not exactly on topic here either!

Unless the oil and gas workers in Siberia have to work in super-hot temperatures, I suppose....?

Even up here in northwest Oregon the heat has been raging. On Friday, high temps reached 108 F in Hillsboro, 106 F in McMinnville, 105 F in Troutdale and 104 F at the Portland International Airport. To reach, and exceed, 105 F in the Willamette Valley is amazing, and rather rare.

The next day, incredibly muggy air rolled in with lots of mid-level moisture and cloud cover above 10,000 feet. Dew points went into the low-to-mid 70s. Getting DPs above 65 F is pretty rare over here. With temps in the 80s and 90s, and the high humidity, we might as well have been in Baltimore or St Louis.

Low temps have been in the 70s due to the high dew points. Usually our lows are 55 to 60 when the highs are in the upper 90s.

Today, we could see 100 F again.


I lived in the Willamette Valley years ago -- not far from Albany and Corvallis.  Mild then, with plenty of rain.

I live in Minneapolis, MN now.  It has been a bit warm here for the season, but seems to be much warmer to our south and west.  The low temps are not quite as low as we like at night, to cool things down.

We've got it easy so far where I live.

I'm curious to know more about conditions in other places, and also what responses people see in others related to awareness of anthropogenic global climate change.

Also, I'm curious to see how people connect this to our fossil fuel habit....and to their own lives.

Hey, yeah, I lived in Albany and Corvallis not too long ago. Corvallis hit 106 F yesterday!

Perhaps one of the most obvious trends in the weather in the western Pacific Northwest is a fairly steady reduction of snow events over the last 1.5 centuries. Used to be, in the 1800s, that snow was a fairly common occurrence in the lowlands, such as the Willamette Valley, and deep snow events were much more common. Annual average snowfall is approaching zero these days, when it was something like 10 to 30 inches depending on location back in the 19th century.

For those interested, see George Miller's "Pacific Northwest Weather" (2004). He's developed his own method for rating winter weather severity for the PNW, and it shows some interesting trends.

Perhaps some of this is due to the urban heat island effect's influence on urban climatology stations, some may be due to long-term solar cycles, and, of course, we have the anthropogenic GHG inputs as well.


We are having a heat wave in England. You'll have to convert to celsius though. A good July temperature is about 28C, we have had about 2 weeks of 28C and above, with a record breaking  >36C temperature last Wednesday (broke 1911 July record) and not far from the all time August 2003 record of >38C (101F?). This week has been just as hot (30C, 31C and 33C tomorrow predicted), although it looks like it will cool down by Friday (BBC prediction so far).

I keep my house cool by having windows open between late evening and early morning and having them shut the rest of the time along with the curtains, especially on the side where the sun is. This keeps the house about 5C/10C cooler than outside. It is still warm inside late afternoon, but cooler than outside. I learnt these tips from the Greeks about how to cool a house. It is not hot enough, often enough for me to think about AC, although I much more prefer the cold to the heat.

Europe has been having the heat wave, but they generally have higher temperatures than the UK, so 30C is hot for UK, but cool for Spain and Greece.

Global warming is a big issue across Europe, but I don't think people really get the connection with fossil fuel habits though. If you told everyone that they cannot heat their home in winter, AC them in summer or have a foreign holiday to Spain in July/August to stop global warming, they would be very unhappy to say the least, but they do agree to do something about global warming, just as long as it doesn't affect them personally.

Currently 72 F, Dewpoint 72 F at 1:21 PM in New Orleans.  Thunderstorm just moved through a half hour ago.

Last few weeks have been unusualy cool.

High today, so far, 80 F.