Shell edges ahead of the field in Russia

Gayane Afrikian
Sunday 23 October 2011 07:28

In the emerging battle between Shell and BP for NK Rosneft, Russia's last big state oil company, Shell has the inside track, say Russian oil analysts.

Shell's partner in Russia, partly-privatised gas monopoly Gazprom, is bigger than BP's Russian partners, the Russian oil company Sydanco and Oneximbank. Although Oneximbank is a fast-developing financial-industrial company, Gazprom contributes about a quarter of the Russian government's tax revenues. This earns it political capital. It is so big that the proposed acquisition of Rosneft "is only one of our 150 planned projects", declared Moscow-based Gazprom general manager, Rem Vyakhirev.

Shell's Russian partner seems to enjoy a political edge over BP's Russian partners, analysts say. Anatoli Chubais, who is close to Oneximbank, cannot afford to give his political backing to the BP-Oneximbank bid for Rosneft now because it could damage him, analysts say.

Russian president Boris Yeltsin sacked three Chubais aides and took away half of the Russian reformer's power base, after parliamentarians in the Duma revealed that a Swiss subsidiary of Oneximbank was paying Chubais and his cohorts a large sum to write a book about privatisation.

As a result of this scandal Mr Chubais lost his job as Russia's finance minister, but remains first deputy prime minister. Russia's prime minister is Viktor Chernomyrdin, the former head of Gazprom.

At a geopolitical level, the battle for Rosneft "is about whether Russia or the West will be [the dominating] influence over Russia's oil and gas politics", said Rustam Narzikulov, a political commentator at the Russian newspaper Nezavisimaya Gazeta. Gazprom, which has the biggest resources of gas in the world, is seen as less susceptible to western influence than BP's own Russian partners.

The privatisation of Rosneft is planned for next year and the sale has become entangled in the centuries-old debate in Russia between Slavophiles, who believe Russia's destiny lies at home, and westernisers, who feel its future depends on more integration with the West.

Rosneft accounts for 11 per cent of Russia's huge oil reserves and little over 4 per cent of total output in the country. In the jockeying for position ahead of the auction, Shell and Gazprom have lined up with Lukoil, a privatised company created out of three former Siberian state oil companies. BP is aligned with Sydanco, whose leading shareholder is Oneximbank.

Last week the country's new finance minister, Mikhail Zadorov, vowed to cut links between government and big business by withdrawing funds from Oneximbank. And in his recent visit to Peking, Mr Yeltsin identified Russia's East Siberian and Far Eastern fields of oil and gas as a major source of petroleum exports to China.

A BP spokesman says petro-political speculation about Rosneft is premature. He says BP has yet to commit itself to a bid for the state oil company.Whichever company offers the most money will get Rosneft, says Oneximbank spokesman, Sergei Chernitsin.

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