Nervous as Shell [about cooperating with the Russian government]

PanAsianBiz ^ | June 18, 2006 | Dr. Bill Belew

[G. Stolyarov II]

When Shell started shelling out mega bucks to drill for oil off the coast of Sakhalin Island, Russia wasn't one of the global oil suppliers. Russia is now.

It is just plain costing too much for Shell to get the oil out of the icy water in the sea of Oshkosh.

So...Shell has teamed up with Russia's Giant Gazprom.

Gazprom will get a share of whatever they find in the sea of Oshkosh, and Shell gets a 50% stake in a Gazprom field in western Siberia.

The relationship with Gazprom is supposed to give Shell some political protection, but it doesn't always turn out that way when doing business with Russia's big guns. For whatever reason, they sometimes just change their minds.

Executives at Shell are nervous as shell, say some.

But, what choice does Shell have? The aim is to have first-mover advantage once the oil starts coming.

But, is it worth the risk?

What do you think?

[G. Stolyarov II]

The deal is most dangerous, because the Russian government might backstab Shell -- as it has been known to do in the past. Will Shell be able to profit from the partnership, or will the Russian government betray and expropriate it? Will private enterprise or government bureaucrats ultimately win from this arrangement? See Dr. Belew's blog at PanAsianBiz