Max Hastings writing an article in the Guardian entitled, “Hopes of close cooperation between Russia and the west are now dead” says:
… As BP is discovering, the change of leadership at the Kremlin will not end its autocratic and nationalistic policies.
Writing in response:
SWEEPING CHANGES inside Russia’s oil and gas sectors in recent years have dented Western investors’ faith in the country’s rule of law. BP is caught up in a state effort to claw back control of lucrative assets, others have been badly scarred. In 2006 BP rival Royal Dutch Shell was forced to give up control of the Sakhalin-2 oil and gas project off Russia’s eastern coast after the country’s environmental regulators threatened to shut it down. Gazprom, Russia’s state-owned energy company duly took over the operation.
Suspicions of a state raid on BP’s Russian assets aren’t surprising. Relations between the countries, already chilled by Britain’s refusal to expel various critics of Russia’s government, have been in a deep freeze ever since the murder of former Russian spy Alexander Litvinenko in London in 2006.
However, there are other issues and it is difficult in ascertaining exactly what the government agenda is. Ongoing squabbles over work permits and suspicion of tax evasion stem from years prior to BP’s involvement in the Russian oil market.
The tone has changed, though. When Gordon Brown brought up the oil issue with Dmitri Medvedev (Putin’s successor) during the G-8 summit this month, the uneasy discussion was of a breakdown in relations between the British and Russian partners. Dudley, the company’s BP appointed boss, is battling to keep his job. AAR, a Russian consortium that controls a large stake in the Russian-British venture has been repeatedly calling for his dismissal, claiming that the business has been floundering.
AAR claims, too, that, among other things, the BP venture is operating too much like a BP subsidiary, resisting expansion beyond Russia to avoid stepping on the British firm’s toes. Instead, the Russians are calling for an independent CEO, and a culling of BP staff seconded to the Russian venture.
© Mark Dowe 2008: all rights protected
Reference:
- Max Hastings, “Hopes of close cooperation between Russia and the west are now dead”
http://www.guardian.co.uk/commentisfree/2008/jul/21/russia.bp?commentpage=1&commentposted=1
Filed under: World Affairs, corporate | Tagged: aar, alexander litvinenko, BP, dudley, gazprom, royal dutch shell, russia, russian oil market
