Russia faces an oil paradox: its coffers are bursting from record energy prices - raising inflation risks - but Moscow can do little to boost exports and ease inflationary pressures despite pleas for more oil.
Instead fears over the future of its wounded giant and largest producer Yukos suggest Russian oil exports could actually fall, if only in the short term.
The reasons are familiar to Western executives dealing with the world's second-largest oil producing nation after Saudi Arabia - state bureaucracy and cut-throat infighting in one of Russia's murkiest sectors.
Russia does not have the pipeline capacity to pump more and decisions about where and when - and under whose leadership - to lay new pipes are seen as a matter of life and death for the country's richest men and politicians.
Few serious decisions have been taken so far.
"Russia's oil production is already exceeding all forecasts. It grew by 10 percent in the first half of the year" compared to the same period in 2003, said Stephen O'Sullivan of the United Financial Group investment house.
He said Russia produced 263 million tonnes of oil over the first six months and that exports over the same time were 21 percent higher than in the first half of 2003 at 194 million tonnes.
But O'Sullivan does not necessarily see this as good news.
"This is good in the short term for the Russian economy but it does not contribute to economic reforms" since other sectors - particularly banking along with small and midsize businesses - are ignored by a state growing fat on petrodollars, O'Sullivan told AFP.
Russian oil production is now setting post-Soviet records and its Communist-era infrastructure is showing the strain. Companies like Yukos have been investing in their own production sites but the state retains control of the politically sensitive pipeline network.
"In the past, Russia helped lower global oil prices," said Troika Dialog oil analyst Valery Nesterov.
"But the rate of production growth is slowing down," he warned. Confusion over Yukos's legal situation and its jailed founder Mikhail Khodorkovsky has not helped.
Oil prices hit a record high last week on reports that almost all Yukos operations were being shut down by the state amid a battle over back taxes.
A company seen as a Western darling and now run by a seasoned US oil man from Kansas pleaded for time and has won a reprieve of a few weeks to continue negotiations.
Yukos said in a statement Wednesday that it has regained access to bank accounts to keep things running in the short term.
But pressure is piling up and few analysts believe that Yukos will survive in its current state. State-linked energy giants - which are not run with the same efficiency as Yukos - are already sizing up Yukos' crown jewels.
Meanwhile the national oil pipeline monopoly Transeft admits it is operating at full capacity.
And it is also fighting Yukos - which had at one stage laid plans to build its own private pipeline network - over rival plans to extend oil supplies to either China or Japan.
Transeft is pushing the longer Japanese route. Yukos executives admit the final decision is in the state's hands while officials in China are growing angrier by the week because Moscow had initially said it backed Yukos' plan to construct a pipeline to their country.
Meanwhile, little is getting done on Russia's Western front: There is still no word from the government on who may get rights to a pipeline that could be built to the Barents Sea and feed European and US markets.
"Russia cannot significantly raise its oil exports. We are limited by the our pipelines and ports," Transeft deputy director Sergei Grigoryev told reporters.
"And it is too expensive to ship oil by rail for us. There is only limited rail potential."
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