Have the Supermajors’ Russian Prospects Improved?

Following on from the previous post, it goes without saying that Russia is going to find it much harder to obtain financial backing for its oil and gas development projects now that the western financial institutions upon which they previously relied are themselves in such trouble.  The money promised by the government to major oil companies facing debt refinancing problems has started to flow, whilst Gazprom remains confident that its development plans will go ahead unchanged despite the global financial crisis.

So where might the cash needed to continue Russia’s oil and gas development come from?  Looking to the Middle East might provide us with an answer, something I mentioned once before in this post:

Most of the national oil companies in the Middle East have enormous reserves and massive production figures, but are loaded down with enormous debt from the days when oil was $10 per barrel, not to mention that these companies have elevated expenses due to them generally being inefficient, overstaffed, and used as a piggy-bank by the sitting government. It is not uncommon for the giant national oil companies of the Gulf States to partner up with a cash-rich western supermajor in order to provide the investment needed to develop a new project or upgrade a field.

Having spent the past few years reasserting their authority over the foreign oil companies operating inside Russia, might the Russian government now be tempted to turn to the cash-rich supermajors to stump up the funds necessary to continue with their development plans?  Such a move might raise questions amongst a population who has been continually told that foreign oil companies are neither welcome nor needed in Russia, and western oil companies – still bruised from wrestling with the Kremlin over control of existing projects – would need more than promises and verbal guarantees to once again pour billions into Russia’s oilfield developments.

But the fact remains that somebody needs to fund Russia’s development plans, and western oil companies are not only well suited to do this, but also – despite all – eager to gain greater access to Russia’s gigantic reserves.  Might we see the Kremlin once again warm to BP, Shell, and Exxon as the financial crisis takes hold?

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9 Responses to Have the Supermajors’ Russian Prospects Improved?

  1. Brent says:

    One wonders how the drop in oil prices will affect Putin’s reign. Russia has so much oil and gas it probably won’t matter much — he seems to have revived the cold war with his xenophobic view of the world, or perhaps that’s just for his political purposes.

  2. Kaahl says:

    I am a grad student but lurk on your blog because I am fascinated with Siberia / Russia. Why? In 6th grade I read a Louis L’amour called Last of the Breed where a Native American US fighter pilot is shot down in Siberia and escapes overland to Alaska during winter by using his survival skills and ancient cultural ways. Just so you know, he shoots down a Russian helicopter with a bow he made from a tree and the tendon of a moose and an arrow head he flinted himself. When Russia finally goes bonkers and you have to escape overland (errr, sort of), please let me know about your experience. Just thougth you might be interested. Arghh,,….time to study mandarin.

  3. David Duff says:

    Two points.

    First, if BP is purblind stupid enough to go back into Russia I shall sell my shares instantly thus causing an almighty run on the price. OK, OK, I only have 230 shares but ‘great oaks from little acorns grow’, don’t they?

    Kaahl, if “Russia finally goes bonkers” and all we have are arrow heads to defend ourselves then I’m emigrating here:
    http://www.dailymail.co.uk/news/article-562717/The-English-adventurer-settled-tiny-Pacific-island-145-years-ago—left-Gloucestershire-accent.html

  4. Khabarovsk online says:

    Probably Russia will go East. Instead of the West.
    India wants bigger share in Sakhalin-3 project and China is mulling the idea of funding ESTO pipeline. The drilling might be local by these well-known state-controlled companies, Putin’s cronies, of course.
    So BP behemoth must think better.
    ;-)

  5. Bjorn says:

    Items on Russia
    1. Health care is good. Expand operations. Deep Brain Stimulation, strengthen bones and nervous system
    2. Physicists scientists No. 1
    3. The pressure is good. See a shit newspaper Aftonbladet
    4. Work rules are bad. There are many qualified outside and inside the idiots
    5. Media is good
    6. The science is bad. 25% of the state budget
    7. The army is good
    8. Prostitution is appalling. Abolished
    9. U-btsflottan is good. But it would broadcast the en 7 vessels and 4 submarines
    10. Kaliningrad to make a major naval base. Nuclear weapons state
    11. Law
    12. Making Osama bin Laden to the king in Chechnya
    13. Making Obama to King Hussein of Iraq. Obama black skull regime.

    http://dagestanmetoden.blogspot.com/

  6. phil says:

    Hi Tim

    Saw this article in the times today about BP and the troubles they are having due to the very high export tariffs they face in Russia. Exports are at 3/4 of what was forecast and the reckon decline is goign to increase on 6% already this year.

    http://business.timesonline.co.uk/tol/business/industry_sectors/natural_resources/article5141799.ece

  7. Lollic says:

    Gazprom’s debt ratio is ont he same level as Chevron’s, Surgutneftegaz has staggering 19 bln$ in cash, without any debt, so what areyou talking about?

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