Don’t Say NO to Government, You May Regret It!

Mikhail Kasyanov says private oil pipelines are not good for Russia
It seems that Russia Prime Minister Mikhail Kasyanov has put an end to a wide range of projects developed by Russian oligarchs and foreign investors, the projects to the sum of dozens of billions of dollars. During his work visit to the Russian city of Murmansk, Mikhail Kasyanov said that in accordance with the Russian legislation, all new oil and gas pipelines must belong to the state. And private investors who finance construction of the new pipelines are just thanked for the assistance and only get preferential tariffs for pumping their oil along the pipelines.

As Russian newspaper Izvestia mentions, until recently all oil-trunk pipelines in Russia belonged to the state-run monopoly Transneft, and gas pipelines belonged to the state-run company Gazprom. Russian officials say that the pipe of the Caspian pipeline consortium is the only exclusion from this rule: it is not clear how exactly, but the pipeline was built with the money provided by foreign and domestic private companies for transportation of hydrocarbon stuff from the former Soviet republic of Kazakhstan to Novorossiisk. This very pipeline probably inspired Russian oligarchs and foreign magnates wishing to get access to Russian oil. Russian oil companies developed several projects more, which would have put and end to the state monopoly of gas and oil export if they were realized.

Here are the projects. Company Rusia Petroleum (the company’s largest shareholders are British Petroleum, the Tyumen Oil Company (TNK) and Interros) plans to construct a gas pipeline from the Kovyktinsky gas field in the Irkutsk region to China; the pipeline costs 2-3 billion dollars. Yukos plans to construct an oil pipeline from the Russian city of Angarsk to Datsin (China). Independent experts say the project costs 1.7 billion dollars approximately; the designed volume of oil supplies is 30 million tons per year. Yukos, LUKOIL, TNK, Sibneft and Surgutneftegas plan to spend 3.5 – 4.5 billion dollars for construction of a pipeline with the capacity of up to 80 million tons going from Western Siberia to Murmansk. Moreover, private oil pipelines are currently already under construction in Russia; they are constructed not only by Russian oil companies, but also by foreigners.

PRAVDA.Ru already reported about attempts of the key shareholders of the projects Sakhalin-1 and Sakhalin-2 to kick up an international row. The reason to it was the fact that Exxon Neftegas, the Sakhalin-1 project’s operator, is constructing an oil pipeline to the port of De-Kastri in Russia’s Khabarovsk region out of its own pocket. In its turn, Sakhalin Energy, the operator of the Sakhalin-2 project, out of its pocket as well is constructing a gas pipeline and an oil pipeline of more than 700 km in length to the enterprise producing liquefied natural gas and to a prospective oil export terminal in the area of Korsakov. At that, each of the companies constructing the pipelines planned to pump only their own products along them.

However, Russian Deputy Minister of Energy, Vladimir Stanev told foreigners that the Transneft company would manage the new pipelines when the construction was over.

Yukos has been negotiating the pipeline problem with China’s CNPC for four years already; the Russian company has achieved agreements concerning guarantees on oil purchase and concerning a loan for construction of the pipeline’s part going on the Russian Federation territory. At that, Russia’s share in the oil pipeline will be 51% at the minimum. But the authorities seem to be dissatisfied with this share.

We can also put aside the fact that Russia President Vladimir Putin said at a session of the RF Security Council that construction of an oil pipeline to China imperiled the national security, and that the pipeline must go to the Russian port of Nakhodka. We should also remember that this route would be advantageous for Russia’s Far East that is currently experiencing a severe fuel deficit. Japanese Prime Minister Junichiro Koizumi came to Russia personally to talk the Russian president out of the intention to construct an oil pipeline to China.

The idea to lay the oil pipeline to Murmansk came up right before the Russian-American oil summit inHouston. The idea was suggested by Yukos president Mikhail Khodorkovsky. Russian companies LUKOIL, TNK and Sibneft immediately agreed to become co-authors of the project; later, Surgutneftegas joined the consortium. However, in this situation once again the government didn’t fail to cool Russian oligarchs. Right on the New Year’s eve, president of the state-run oil company Rosneft, Sergey Bogdanchikov (who is also disappointed with his failure at the Slavneft oil company privatization) offered his colleagues from the “private sector” to chip in and modernize the Baltic pipeline system instead of construction of a private oil pipeline to Murmansk. It was also said that the government would highly appreciate the modernization. However, Russian oligarchs waved the suggestion aside. Moreover, they have even started an active work with the lobbyist in the state administration.

After a while, Prime Minister Mikhail Kasyanov summed up the results of the discussions held in the government and said that all pipelines in Russia must belong to the government. He declared it at a session dedicated to construction of an export pipeline to Murmansk. Besides, witnesses say that the prime minister snubbed the initiators of the project: “You do understand that in accordance with the Russian legislation, an oil-trunk pipeline cannot be private.” Mikhail Kasyanov added that he had explained the same fact to Yukos President Mikhail Khodorkovsky, and the latter probably misunderstood the explanation.

The prime minister recommended the oligarchs to adjust the project to the “rules of the game”, and after that he promised the project would be considered at a session of the government. At that, Mikhail Kasuanov assured that the government didn’t reject private investments in the pipeline business. He explained: “These investments will allow investors to enjoy preferential tariffs for oil pumping. Necessary calculations are being already done.” Last summer, when Deputy Chairman of the Presidential administration Dmitry Kozak submitted a project for nationalization of natural resources for consideration of the government, it looked like an awkward joke. At that time it was believed that nobody could be higher than Yeltsin’s oligarchs. When today the Russian prime minister, also known for his connection with Yeltsin’s “Family”, speaks to the “elite of the Russian business” this way, it must mean something. (Is it possible that after a while, when the oligarchs become more obedient, the Russia president will refute the words of the prime minister?)

Russian mass media inform, Russian oil companies are disappointed with the suggestion of Mikhail Kasyanov. In private debates, presidents of Russia’s largest oil companies say they won’t finance projects that would be further controlled by the government. They are sure that Transneft won’t be a success with attraction of investments for construction of pipelines.

However, the state-run monopoly Transneft has got wonderfully tuned mechanisms for obtaining money. Transneft Vice-president Sergey Grigoryev said in an interview to the Russian newspaper Izvestia, the company would take loans, and the loans would be further paid back at the expense of the oil transportation tariffs (which means that the oligarchs will all the same pay the loans). Such is the simple governmental technology.

If we paraphrase the words of Karl Marx, we may say that we cannot do business in a state and be independent of the state. That is why the situation when the oligarchs say NO to the government is extremely absurd. Especially that the current problem is not so much important as presidential elections, for instance. It seems that the example of famous Russian oligarch Vladimir Gusinsky taught the rest of the oligarchs no lesson. It is highly unlikely that Yukos president Mikhail Khodorkovsky wants to share the fate of Boris Berezovsky, currently living in exile in London.

We cannot but ascribe the events in the country to a so-called pre-election syndrome.

Kira Poznakhirko PRAVDA.Ru

Translated by Maria Gousseva

Read the original in Russian: https://www.pravda.ru/economics/34484-russianeconomy/

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