New oil minister favors Russian firms
New oil minister favors Russian firms
By Lynnley Browning
MOSCOW (Reuter): Russia's new top energy official, Fuel and
Energy Minister Pyotr Rodionov, may take a Russia-first approach
to deal with foreign oil firms but may also soften the ministry's
Soviet style, energy analysts said on Monday.
Rodionov, appointed in August, said in a recent interview that
strong terms for domestic oil companies working with Western
majors were part of his agenda.
But the minister -- who dealt with transportation and pricing
in his previous job as director of Lentransgaz, a unit of natural
gas monopoly Gazprom -- may also turn the ministry into more of a
Western-type regulatory body and less of a Soviet-style, heavy-
handed planner.
Rodionov, who has no direct expertise in oil matters, is a
mystery to Western energy executives, and analysts said he was
likely to rely on specialist advisers when it comes to oil.
In the interview, Rodionov spoke repeatedly and vaguely of
establishing "the rules of the game" for the oil sector, loosely
defining them as normal tax and tariff policies and good terms
for Russian oil firms.
"The main goal of Russia's fuel and energy complex is to make
it so it works to boost the entire economy," he said.
Analysts said Rodionov's approach could be a double-edged
sword for foreign oil investors eying multi billion-dollar
exploration and development projects in Russia.
Rodionov could produce tougher, more expensive terms for
Western oil companies doing business here, they said. But he
could also spawn a ministry that is less aggressive about getting
involved in the daily running of the oil business.
"There's been a major shift of emphasis for the ministry to
being much more of a regulatory body with oversight and policy
function and less of a meddler in day-to-day operations," said
energy specialist Matthew Sagers of PlanEcon in Washington.
"Rodionov will move it in that direction."
Western oil firms, eying tens of billions of dollars of deals
in Russia's energy sector, want clear policy signs from Rodionov
on everything from natural resource laws and taxes to the pace at
which exploration and development should proceed.
Rodionov said no existing contracts would be broken but he
called for a case-by-case approach to new deals and said some
strategic reserves might not be developed for 20 to 50 years.
"He has made it clear, like any good minister would, that his
main concern is improving conditions for Russian companies," said
a Western source at a U.S. oil major in a Russian project.
Asked about his attitude to foreign oil investment, Rodionov
said: "It in no way hinders things and some ways helps."
He also said Western investors should consider the exploration
and infrastructure work done by the Soviet Union -- a point which
is one major stumbling block in negotiations between U.S. Amoco
and Russia's YUKOS on Russia's largest, $45 billion production-
sharing contract.
Western investors may not get help from Rodionov in improving
a production-sharing law they say is flawed. The legislation is
the key to big-ticket oil deals here.
"The law is in the hands of parliament and is going through a
normal, democratic process," Rodionov said, referring to changes
being considered by politicians, some of them opposed to terms
friendly to the West.
But Rodionov may turn his ministry, which has already seen
much of its power devolved to Russia's new vertically-integrated
oil companies, into a Western-style regulatory body dealing with
transportation and pricing issues.
"Shafranik was much too involved in projects and management
and was basically trying to do that old U.S.S.R thing," said
Sagers, referring to previous minister Yuri Shafranik.