Putin signals end to overseas ownership of Russian energy

timesonline ^ | December 12, 2006 | Carl Mortishead, International Business Editor

[Flavius]

Carl Mortishead, International Business Editor # Firms to have subcontractor role # Shell faces fight over Siberian field Foreign energy companies will be welcome in future as subcontractors but not as owners in Russia’s energy industry, the Kremlin signalled yesterday as Gazprom moved closer towards wresting control of Sakhalin-2, the giant Siberian gas project, from Royal Dutch Shell.

The Russian gas giant confirmed that Shell had made a new proposal in negotiations over Gazprom’s participation in Sakhalin Energy, the company building a $20 billion (£10.2 billion) liquefied natural gas scheme in Eastern Siberia.

The project has been beset by claims and threats of prosecution from Rosprirodnadzor, the Russian environmental control agency, a campaign that is seen by Moscow energy analysts as calculated to weaken Shell’s negotiating position.

Sources within Moscow suggest that Gazprom will acquire 50 per cent plus one share of the Sakhalin Energy company, reducing Shell’s stake to 25 per cent, from 55 per cent. Mitsui and Mitsubishi, the current minority investors, would see their stakes reduced further.

Mounting pressure on Shell to concede control of Sakhalin Energy to Gazprom has coincided with nationalist sentiment. Dmitry Peskov, spokesman for President Vladimir Putin, yesterday said that the environment had changed and Russian companies no longer needed foreign help.

“Our companies have the opportunity to be owners by themselves, to attract finance and certain technologies. This changes the conditions for foreign investors. They won’t be so much owners, they will have opportunities as contractors and subcontractors,” Mr Peskov said.

“We understand that it is better to have a direct share but you have to understand these are Russian resources. No country in the world would want to give up its natural resources to foreigners.”

Existing agreements would be respected, he said, but he suggested that the contracts granting major concessions to companies, such as Shell, were a legacy of a past era. “In the 1990s, our country was in a poor economic state, we couldn’t develop energy by ourselves. We had to attract investors with extremely favourable conditions. Now the situation has changed drastically,” Mr Peskov said.

Shell confirmed yesterday that its chief executive, Jeroen van der Veer, had a meeting in Moscow on Friday with Alexei Miller, Gazprom’s chief executive, at which “Sakhalin-related issues were discussed”. The meeting, which was also attended by Viktor Khristenko, Russia’s Energy Minister, was described by a Shell spokesman as “positive”.

In Moscow, Gazprom said that Shell’s proposals were being analysed. “A decision will be taken in view of the existing problems at the Sakhalin-2 project, including ecological,” the Gazprom spokesman said.

Shell’s relationship with the Kremlin has been chilly since it signed a draft asset swap agreement with Gazprom last year, under which the Russian utility was to acquire a quarter of Sakhalin Energy in exchange for half of Zapolyarnoye, a large Western Siberian gasfield. A week after the agreement, Shell disclosed that Sakhalin’s costs had doubled to $20 billion.

PUTINISATION OF RUSSIA

Kremlin’s Attempts to Reclaim Control of Strategic Assets

Gazprom: Shell expected to cede control of Sakhalin II to Gazprom

Yukos: Kremlin tax bill clears way for Rosneft to acquire Yugansneftgaz

EADS: Russian bank VneshTorgBank takes 5 per cent of EADS

Ukraine: Row with Ukraine over Russian gas price settled when Kremlin acquires greater control of gas pipelines

Armenia: Kremlin acquires control of gas pipeline to Iran in return for agreed depressed gas price

Next in Putin's sights

Belarus & Georgia: Threatening to increase price of gas but prepared to settle in return for control of distribution pipeline

Shtokman: Russia says it will not invite foreign partners to develop world’s second biggest gas field. To be developed by Gazprom alone

TNK-BP: Gazprom or Rosneft expected to buy out BP’s Russian private sector partne

[Proud_USA_Republican]

velcome back to 1960's commrades.

[DoughtyOne]

I'm sure this is going to prompt more foreign companies to invest their time expertise and money in Russia.

[tx_eggman]

We understand that it is better to have a direct share but you have to understand these are Russian resources. No country in the world would want to give up its natural resources to foreigners

Didn't have much trouble doing it when they needed the capital and the expertise ... they won't be able to woo new foreign investment in their energy sector for a long, long time.

[Uncle Hal]

Putin is a ruthless person. I would trust him as far as I could throw him. Neither should we as a nation.

[Youngman442002]

I called this years ago...they open everything up to us to spend our money on and engineer it for them..the hard work......then they take it back....just like the Arabs did..and China will do...its the only way a Communist country can develop....they will destroy it soon...just like Venezuela is doing..

[claptrap]

Well geewilikers how would you expect a KGB agent to
behave. I mean come on this guy isnt a capitalist pig.
He isnt the head of Russia because of low voter turnout!

[Red6]

Our Russian fan club will say what now? Maybe they can have some more kangaroo court cases to remove people, or they can feed some more Dioxin to leaders in the Ukraine, oh wait, now it's polonium 210. lol

Not much has changed. Those who argue Russia is any better today are naive.

[Proud_USA_Republican]

Their faux-capitalism is a joke. Maybe the red flags and statues of stalin are gone, but they are still communists through and through. Their entire economy will be undiversified and solely based on exporting energy like Saudia Arabia. And no matter what, once you become a one-trick pony, one day, that trick no longer is needed and your deadmeat.

[sgtbono2002]

Probably 90% of the oil in the world was found and drilled for by Companies from the United States and Britain.

After drilling their wells and establishing their infrastructure, they have been thrown out of almost every country they put in business.

Sometimes you wonder why, but of course the profits they make early on are great enough to make them do it again , even though they know they wil eventully be vilified.

[Proud_USA_Republican]

The big joke is that Putin is claiming he's doing this to protect the environment. Yahh right. Russia is one of the biggest polluters on the planet and absolutely no regulation or policies on protecting the environment. Once a commie thug, always a commie thug.

He's seizing any profitable business in Russia to boost his parties power and bankroll. They can't thug the world with their military anymore, so to get back to the good ol commie days of thuging something to make themselves feel important, they are going to thug the world via oil and NG.

[RusIvan]

“We understand that it is better to have a direct share but you have to understand these are Russian resources. No country in the world would want to give up its natural resources to foreigners.” ==

DO you disagree with it?

[RusIvan]

I'm sure this is going to prompt more foreign companies to invest their time expertise and money in Russia.==

Russia doesn't need no foreign money anymore. She has about $230 blns surplus. The expertise Russia can buy directly from its carriers. She may just employ the western engeneers with high salary. So all benefits will be in russian pockets and no foreign interests will make money on Russia.

[RusIvan]

Their entire economy will be undiversified and solely based on exporting energy like Saudia Arabia. ==

Not true. Russia exports wheat these days. Even to Ukraine and Italy.

[A. Pole]

"We understand that it is better to have a direct share but you have to understand these are Russian resources. No country in the world would want to give up its natural resources to foreigners."

De-Yeltsinization bump

[DoughtyOne]

Russia has had those known oil reserves for decades. They couldn't convert them into product or delivery on a scale comparable with today's technology outside it's borders. Now they want to cut out the people who did get them up to speed. That's a lot like confiscating foreign interests, something the communist states were famous for. If you think this is a good idea, check out how it worked for Fidel Castro.

[M. Espinola]

"He's seizing any profitable business in Russia to boost his parties power and bankroll. They can't thug the world with their military anymore, so to get back to the good ol commie days of thuging something to make themselves feel important, they are going to thug the world via oil and NG."

Well worth repeating!

Putin and his KGB cronies have created a domestic element of existing in a state of fear, a neo-Soviet society. During the 70 years of communism every captive nation which made up the those former captive nations which were stuck behind the Iron Curtain of Soviet slavery are despised and threatened by the Putin's ruthless Energy Cartel with natural gas blackmail if they do not grovel to the Kremlin.

Numerous former Russian slave states are fighting back against Premier Putin, while at the same time Moscow continues arming the Axis of Evil.

Azerbaijan To Stop Importing Russian Gas Next Year

Russia gets tough on energy sales to Europe No foreign access to pipelines, official says

Issuing centers focus of Russia-Belarus single currency dispute

SYRIA: PRESIDENT ASSAD TO VISIT MOSCOW NEXT WEEK

Let's see if anyone from the Putin Promoters Club defends the Russkie weapons sales to Axis of Evil tyrant Assad, the same brutal dictator exporting trained Islamic terrorists to murder American & Coalition troops?

[RusIvan]

Putin and his KGB cronies have created a domestic element of existing in a state of fear, a neo-Soviet society. ==

"Neo-Soviet society"? Russia? You just do not understand what you talk about:)). Just travel to Russia and see with your own eyes.

During the 70 years of communism every captive nation which made up the those former captive nations which were stuck behind the Iron Curtain of Soviet slavery are despised and threatened by the Putin's ruthless Energy Cartel with natural gas blackmail if they do not grovel to the Kremlin.==

They just need to pay the MARKET price and Russia with plesure will take thier moneys and give them the product. But they instead just beg for discounts and even refuses but steal the product to pay if they weren't granted the discounts.

[RusIvan]

Let's see if anyone from the Putin Promoters Club defends the Russkie weapons sales to Axis of Evil tyrant Assad, the same brutal dictator exporting trained Islamic terrorists to murder American & Coalition troops?==

Just relax. Assad was educated in France where he lived long years. After all where he gets those US dollars for which Russia sells her weaponry?

Accually if America step forward and order those weaponry of Russia' production I'd be glad. But someone has to feed russian workers employed in the weaponry factories? SO Putin acts in favor of those workers and industries.

[M. Espinola]

"Neo-Soviet society"? Russia? You just do not understand what you talk about:)). Just travel to Russia and see with your own eyes."

Comrade, with you guys I never know what I am talking about, correct? Would Col Putin, opps, 'President KGB' meet me at the airport and put me up in the best facilities the Kremlin Ritz can offer? I think not, in fact if someone such as myself ever traveled to Putinland, it would be a extended Siberia vacation... at best.

"They just need to pay the MARKET price and Russia with plesure will take thier moneys and give them the product. But they instead just beg for discounts and even refuses but steal the product to pay if they weren't granted the discounts"

Why is it Putin's "MARKET" includes every ruthless leftover commie dictator, coupled with anti-Western Islamic tyrants making up the Axis of pure Evil?

'Thanks for the nuclear fuel Vladie!'