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Kremlin high on oil clout
Russia may not be a military superpower, but under Vladimir Putin it has been rebuilding global influence using another kind of muscle: oil power.
Russia may not be a military superpower, but under Vladimir Putin it has been rebuilding global influence using another kind of muscle: oil power.
"There is one sector in which Russia holds a special position, the energy sector," Putin told Palestinian leader Mahmoud Abbas last month. Russia, the world's second-largest oil producer, is acquiring clout that matches that of OPEC.
Says Michael Heath of Moscow brokerage Aton, "Under Putin the Kremlin has asserted control over Russia's energy sector, and is using that to restore Russia's image and influence in the world".
Not only is oil set to remain above $40 per barrel, thanks to new finds in Siberia, Russia's actual oil reserves are probably twice the 70-billion barrels normally listed.
The world is wooing Russia. It supplies about two-thirds of the European Union's natural gas. The EU has in return granted preferential trade deals, supported Russia's WTO bid and muted criticism of Moscow's ongoing war in Chechnya.
George W Bush is expected to push Putin to build an oil pipeline to the ice-free port of Murmansk, from where oil can be easily shipped to the US. "The US wants to diversify its sources of supply away from the Middle East," says Heath.
But the Kremlin is limiting opportunities for foreign oil majors in Russian oilfields.
But experts believe small exceptions might be made for companies representing strategic partners such as India and China.
Indian Petroleum Minister Mani Shankar Aiyar hopes Putin will permit India to invest in the new Sakhalin-3 oilfield and buy up to a 15 per cent stake in Yugansknefegaz.
"Russia’s policies regarding foreign investment in our energy sector are unclear," says Oleg Ordin of the Institute of Financial Studies. "But it may be Indian firms will be allowed to take minority positions in some Russian assets. That's a political question not an economic one".
