For both liberals and conservatives in the Russian government, western sanctions and oil price volatility present new challenges and opportunities. Both camps hold the key to Russia’s economic and political stability.
The conservatives, led by Igor Sechin, dominate the oil industry through the state-controlled national champion Rosneft, where Sechin is chief executive. The liberals, represented by prime minister Dmitry Medvedev, finance minister Anton Siluanov, deputy prime minister Arkady Dvorkovich and central bank governor Elvira Nabiullina, steer the country’s fiscal and monetary policies. Read more
As European leaders threatened yet tougher sanctions to punish Russia for its aggressive policies in Ukraine on Monday, Vladimir Putin was thousands of miles away in oil rich east Siberia making friendly with a visiting Chinese official.
“On the whole we are very careful about allowing our foreign partners in, but of course for our Chinese friends there are no limits,” Russia’s president said.
China is emerging as the winner in the Ukraine crisis even as Russia’s relations with the US and the European Union go from bad to worse. It has secured a huge gas deal with Gazprom and is making strides towards greater involvement in the Russian oil and gas production. Read more
Russia is rethinking investor friendly dividend reforms as the Ukrainian crisis weighs on its faltering economy. Rules introduced last year that would oblige state companies to put more of their profits in shareholders’ pockets may be shelved, according to a report out on Wednesday.
Russia has been pushing state companies to pay more generous dividends in an effort to improve the country’s investment image and boost interest in upcoming privatisations. Rules introduced in late 2012 setting a minimum 25 per cent pay out were a step in the right direction but, as often happens with Russian regulations, there was room for interpretation. Read more
By Bruce Misamore, former CFO of Yukos
As the world flails about looking for ways to get Russia’s attention over the Ukraine and Crimean crises, and Vladimir Putin looks on impassively, the UK has a unique opportunity to take a long overdue and meaningful action: delist Rosneft from the London Stock Exchange. Read more
By Leslie Palti-Guzman of Eurasia Group and Tatiana Mitrova of the Russian Academy of Sciences
As the global market for natural gas is transformed, Russia and its national champion Gazprom have found their long-term export strategy challenged. No longer able to rely on their core European market, the Russians are looking eastwards, where they have long been seeking a strategic gas deal between Gazprom and the China National Petroleum Corp (CNPC) that would provide an easily accessible market for gas from new fields in eastern Siberia. Read more
The Russian parliament dealt Gazprom a blow on Friday, passing legislation that will allow independent gas producers to export liquefied natural gas.
But read the small print of the law and it’s not as bad for Russia’s natural gas monopoly as it sounds. Only two independents will be permitted to muscle into the LNG export business and the scope of their operations will be limited to specific gas fields. Read more
Russia and Vietnam signed a raft of economic agreements on Tuesday that will strengthen their strategic partnership and counter rising Chinese influence in southeast Asia.
The deals, signed during a visit by Vladimir Putin to Vietnam, will see Russia step up involvement in Vietnamese energy markets and help boost security in the country that has been a close Kremlin ally since Soviet times. “Vietnam has been a long-term, trustworthy partner for Russia and the political dialogue between the two countries is at a high level,” Putin told reporters after talks with Truong Tan Sang, his Vietnamese counterpart. Read more
Scheme of the ESPO oil pipeline route | Source: Centre for Eastern Studies
Rosneft’s plans to step up oil deliveries to China will strain Russia’s new eastern oriented export pipelines to the limit. A preliminary deal struck on Monday will see Kazakhstan come to the rescue shipping oil on Rosneft’s behalf through its own pipeline to the Chinese frontier.
It’s a set back for Transneft, but the Russian state oil pipeline monopoly will probably have to lump it. Read more
Rosneft has agreed to allow CNPC to help develop east Siberian oil resources in a move that underscores deepening energy ties between Russia and China. Coming on the eve of an official visit by Dmitry Medvedev to Beijing, the deal provides a positive backdrop for talks about a long delayed contract for Gazprom to supply gas by pipeline to China.
Rosneft and CNPC signed a memorandum on Friday calling for the creation of a joint venture to explore and produce oil in east Siberia. Development of Srednebotuobinsk, a world class oilfield sitting close to the East Siberia Pacific Oil export pipeline (Espo), will serve as the foundation of the future venture, Rosneft said in a statement. Read more
Sechin: he seems friendly
The cash-strapped government of Belarus is preparing to re-start its privatisation programme, stalled since last year. It plans to sell stakes in a few dozen state-owned companies and Mozyr refinery, one of two in the country, is the jewel in the crown.
It seems that Russia’s Rosneft, which already partly controls Mozyr with Gazpromneft, the oil arm of Russian state gas giant Gazprom, is among the biggest potential bidders. Read more
Be nice to the little guy
Rosneft has finally caved in to pressure and offered to buy out minority shareholders in TNK-BP at a premium to the market price.
Minorities believe they got a raw deal when Rosneft took over the Anglo-Russian oil major this year and are hoping to do better. Rosneft thinks it’s doing them a favour, but the end to this saga is still a long way off. Read more
Never mind the breathtaking debts Rosneft ran up buying TNK-BP this year, Russia’s state oil company is still out on an asset shopping spree. In a deal announced on Tuesday Rosneft will splash out $1.8bn to acquire a large stake in a Russian gas producing venture from Enel, the financially troubled European utility. Read more
Minority shareholders in TNK-BP got a raw deal when Rosneft took over the Anglo-Russian oil major this year.
But even if the odds are stacked against them, they’re not yet ready to give up the fight. Having failed to persuade Igor Sechin, Rosneft’s chief executive, to offer a fair price for their shares, the minorities have taken the bold step of launching a personal attack on the close associate of president Vladimir Putin. Read more
Rosneft has bolstered its position in the Russian gas market by taking full control of Itera, an independent gas producer and trader. Announcing the deal on Tuesday, Rosneft reiterated its goal of becoming Russia’s biggest independent gas company, with production second only to that of Gazprom.
Rosneft has invested $2.9bn to acquire the 49 per cent of Itera that it does not already own. “The gas business is one of the top priorities,” Igor Sechin, Rosneft’s chief executive (pictured), said in a statement on Tuesday. Read more
By Lord Ponsonby, chairman of Yakut Energy
A change is underway in Russia. Despite its size and variety of European and Asian neighbours, Russia’s role as an exporter of oil has traditionally tended to focus on its western borders. However, there are signs that the country’s efforts are now flowing eastwards instead. The announced deal between Rosneft and China for supply of $270bn worth of oil over the next 25 years shows how serious Russia’s shift east is. Read more
Norway has been producing oil offshore since the 1970s and hardly needs help from relatively inexperienced Russia.
So presumably it’s for strategic reasons that Norway’s energy ministry decided this week to award Russian oil companies rights to explore on the Norwegian continental shelf for the first time. The two countries do after all share an offshore frontier. Read more
Rosneft has been warning minority shareholders in TNK-BP not to expect any favours, ever since it took over the Anglo-Russian oil producer. All the same, it’s a disappointment for these shareholders – who have regularly received fat payouts – to learn on Thursday that they won’t be getting any dividends this year.
Minority shareholders – mostly foreign long term investors – hold around 5 per cent of TNK-BP Holding, the listed unit of TNK-BP, that was acquired by Rosneft together with the parent company in a deal announced last year and completed this March. Read more
Russia has not been the Eldorado that international oil majors hoped when it opened up to outside investors after the Soviet Union collapsed. But that has started to change as Rosneft, Russia’s powerful state oil company, moves outside its comfort zone and begins to explore in remote and challenging offshore areas. In the latest of a string of foreign deals, Rosneft has teamed up with Japan’s Inpex to explore waters off Russia’s far eastern coast. Read more
When Russia’s Communist party called for a Moscow street to be named after Hugo Chávez in March, the city authorities refused on grounds that the former Venezuelan leader had not been dead long enough to qualify for the honour. However, in a sign of the importance Russia attaches to Venezuelan relations, Igor Sechin, the powerful chief executive of Rosneft, wants Moscow to waive the rules. Visiting Caracas this week to finalize a big oil deal, Sechin said a Chávez street should indeed be added to the map of the Russian capital. Read more
Compromise is often seen as a sign of weakness in Russia so it’s encouraging to see one of the country’s most powerful men giving ground in a high profile conflict over corporate governance. Six months after denying that Rosneft had any obligations to minority shareholders in TNK-BP’s listed unit, Igor Sechin, the chief executive of Russia’s state oil company, appears to be backing down. Read more