Tag Archives: oil and gas politics

«Endeavor to change regime in Russia – nearly official explanation for sanctions»

Dmitry Evstafyev, born 1966, graduated from College of Asian and African Studies of Moscow state University and pre-doctorate courses Institute of USA and Canada Studies of Russian Academy of Sciences. Since 1992 – engaged in political and security studies. Since 2001 – actively worked in business PR, risk assessment, and strategic consulting business. Worked with and in major Russian industrial corporations. Since 2013 – Professor of Chair of Integrated communications of National Research University – Higher School of Economics.

Romanian-flag– Mr. Evstafyev, you said in one of your recent article that between Putin’s speech at the Yalta and Sochi (Valdai) are notable differences. But I think it’s normal, also the target audience was different. Am I wrong ? Give our readers some details about you opinion.

Evstafyev– You are both right and wrong. You are right from the point of view of immediate audience. It is definitely foreign politicians and political scientists. You are wrong from the point of view of the major audience. That is Russian “ruling class” and its associates. Everybody in Russia for some time was waiting for “signals” from President. Signals came and they were quite strong. They reflected the new – more difficult – political situation and integrity of the “inner circle”. These are predominantly “internal” messages. They also reflect absence of radical foreign policy plans. But that is also an important “internal” message.
In general one should understand that for current Russian leadership at this point of their political life “domestic” (in a wide meaning of the term) is much more important that “foreign”. That is why the “Valdai” speech was so widely covered in Russia. Much wider than “Yalta” speech.

– You say that Russia should take advantage of the current window of opportunity and initiate a systemic reform of the government and political stage. Do you think that we will witnesses to significant changes in the two plans in the next few months?

– I would draw you attention to my other article – “Chances for development”/ ”Шансы на развитие”  (published in gazeta.ru, November 3, 2014). Some important points were outlined there. If we will not witness a drastic change including reshuffle of the upper echelons, the political crisis in late 2015 – early 2016 is inevitable. The “Valdai” speech shows that Kremlin at least sees that threat. To what extent Kremlin is able and ready to act – that is a big question to which no one knows the answer. But the pressure for “less liberal” and more “industrial” (we call that “anti-Kudrin”) economic agenda grows. The problem is that the worse the economic situation is and the more pressure the West puts on Russia the smaller the chance for liberals in the government to survive.

the-cold-war-era

– In April, Frankfurter Allgemeine Zeitung has published an article entitled “Putin should prepare for a long Ice Age period”. Now, the same journal released a column signed by John Kerry, that seems an invitation to calm down the tensions between US and Russia. Course, sanctions go on, but what do you think ? Will have a new Cold War or is time to back the business as usual ?

– There would probably be not a Cold War in a traditional sense since there is little (but some and that is important ideological content) and no global bipolarity. But the confrontation has already started. The West in general does not conceal that its target is to change a regime in Russia with – let’s say – trans-constitutional means. That was an explicit – nearly official – explanation for sanctions. That definitely “means war” (like in Buggs Bunny cartoons). That could be called “hybrid Cold War” but in general the Western idea that it could try to remove regime in Moscow simultaneously trying to cooperate with it where the West wants (jihadists, Iran, non-proliferation) looks ingenuously stupid. War means war. And for Russian economy and policy the “long ice” period (10 years I think) would be not good. It would be great.

– The presence of President Putin at APEC and G20 Summit changed something regarding bilateral relations between Russia and the West countries ?

– No. The mid-term political line is determined and no one seems to be ready to pull back. The earliest time for changes – early spring. I do not think that any chances for dialogue would emerge in spring but who knows…… The starting point is clear – West should unequivocally recognize that the Crimea belongs to Russia, but I do not think that it is ready yet. We can wait…..

– Oil and gas market has been “pretty turbulent” in recent months. Chart.ashxYou also work on the business consulting field. Give me an advice, please: if I am a Chinese businessman, should I buy shares to Rosneft?

– If you are Chinese and you are a businessman – yes, buy. If you are US or EU and you are an “investor” (you are engaged in speculative transactions at the fund market) – sell. If you are real US businessman – buy. If you are real businessman from EU – sell to Chinese or Indian. There will be very little space (if any) for EU-based business in fuel and energy sphere in Russia if the current political trend continues. There will be, though, space for others.

I ask you about because actually, we notice that “Gazprom”,“Rosneft” and “Lukoil” are considering re-placement of their shares on the Stock Exchange of Hong Kong in Asian currencies. As the “Interfax” said, the topic was discussed last week at a meeting of Russian Ministry of Economic Development with its counterpart in Hong Kong as part of the APEC summit in Beijing. Do you think it’s a move with medium and longterm impact on oil and gas market?

– In a mid-term perspective – yes. In a sort term – no. At this time too little of operational and financial infrastructure in the Far East exists for these companies despite the fact that the recommendations to develop it were put on the table in early 2000s. It would take 2-3 years under current circumstances to develop it. After that the impact could and would start to grow.

– Finally, but not least important thing: how is perceived from Moscow the recent result of Romanian presidential election ?

Hardly noticeable. Interesting. Absolutely opposite situation here. At the local Moscow elections all who used “I-ph”, Facebook, Vkontakte as well as administrative resource lost. Heavily. Grass-roots. Interesting result. Much more attention to Moldova election. Moscow is not enthusiastic about Moldova division. In my understanding Moscow would prefers to maintain status-quo. But considering other issues – one more Moldova, one less Moldova – no big deal. People in Europe do not understand that they pushed Russians (most of them, excluding not very many selected personalities) beyond the “threshold of pain”. People think that the crisis and confrontation would be anyway. Than why we should be “nice”?

interview made by Gabriela Ionita

Rosneft and ExxonMobil – new steps towards implementation of strategic cooperation

The Russian state company Rosneft and US Exxon Mobil Corporation signed another deal in first week of December 2012, a new sign for mutual project called a  “Pilot Development Agreement”, according to the deal both of them will assess the opportunity of commercial production of fixed oil reserves at Achimov and Bazhenov in Western Siberia.

The agreement was signed by Igor Sechin, president and chairman of the management board at Rosneft, and Stephen Greenlee, president of ExxonMobil Exploration Company. Rex Tillerson, chairman and chief executive officer of Exxon Mobil Corporation, was present for the signing, as well as the senior management of both companies. The document is another step towards implementation of the long-term strategic cooperation agreement the companies signed in 30 August 2011.

“The companies will set up a joint venture to run a pilot program and potential commercial production with equity interests of 51 percent for Rosneft and 49 percent for ExxonMobil. Work will be carried out at Rosneft’s 23 license blocks covering a total area more than 10,000 square kilometres. Rosneft and its production subsidiaries will provide staff and access to existing infrastructure. ExxonMobil will provide financing of up to $300 million for the pilot program, as well as state-of-the-art technologies and specialists in geology, development and well engineering and completion. ExxonMobil will also provide production management services for drilling complex horizontal wells so as to evaluate and commercially develop these tight oil reserves” it says in the press release of Russian Company. Upon completion of the pilot program, Rosneft and ExxonMobil will jointly select blocks for commercial development in 2015. The two companies will draw on their technical and production experience to ensure commercially viable development and potential production growth in Russia’s West Siberian basin.

“Maximising production efficiency at every field and exploring new technologies to exploit the potential of tight reservoirs is a strategic priority for Rosneft” said chief of Rosneft, Igor Sechin. “I am certain that our experience and infrastructure in Western Siberia, coupled with the state-of-the-art technologies of our partner ExxonMobil, will allow us to begin developing large tight oil reserves.”

Sechin_TillersonAlso, a few days later, ExxonMobil and Rosneft signed a Declaration on Protection of the Environment and Biodiversity for Oil and Gas Exploration and Development on the Russian Arctic Continental Shelf. The declaration was signed during a meeting between Igor Sechin, Rosneft president and chairman of the management board, and Rex W. Tillerson, chairman and chief executive officer of Exxon Mobil Corporation, and senior managers from both organizations. The declaration sets out measures to help protect the Arctic’s ecosystems during oil and gas exploration and development activities to be undertaken by Rosneft and its partners. Commenting on the signing, Sechin said, “Rosneft and ExxonMobil have worked together effectively for quite a long time. I am grateful to Rex Tillerson for the decision to join the initiative.”

PS: Recent, US oil and gas company Exxon Mobil Corphas announced it is to begin exploration activities on the east coast of South Africa.

PetroChina – Encana agreement worth $ 2.2 billion

China continues its expansion in the field of natural resources

State-run energy giant PetroChina signed an agreement with Canadian firm Encana to acquire a 49.9% stake of the natural gas project (Duvernay Lands) in Alberta. For this, the Chinese company will pay $ 2.2 billion / 1.3 pounds. Encana is a leading North American energy producer that is focused on growing its strong portfolio of diverse resource plays producing natural gas, oil and natural gas liquids. According to Encana’ press release, Lyalta-Compressor-Station-3“At closing C$1.18 billion was paid to Encana and C$1.0 billion is payable over the next four years in the form of a carry of half of Encana’s share of development capital. During this period, the joint venture partners plan to invest a total of C$4.0 billion in new drilling, completion and processing facilities. Encana estimates that the Duvernay joint venture lands contain about 9 billion barrels of oil equivalent petroleum initially-in-place. Encana remains the operator of the joint venture with its 50.1% working interest”.

This is the most recent investment company PetroChina to purchase their oil and gas resources in a bid to satisfy growing domestic demand for energy, says BBC. This is not the first and probably not the last. Remember that earlier this year, PetroChina became the owner of the entire project to exploit gas from MacKay River (in northern Alberta) after acquisition of Athabasca Oil Sands Corp. its stake to 40%, while in 2011 acquired 60 % of shares. Also, PetroChina reached Canadian shale gas assets through a deal with Royal Dutch Shell, which shows China’s underlining strategic interest in Canada, in a transaction reportedly worth more than US$ 1billion. In addition, earlier last week, PetroChina announced it will invest a significant stake in an Australian liquefied natural gas to those of BHP Billiton – $1.6bn investment in the Browse natural gas project in Western Australia, notes Financial Times. “Canada has been a magnet for Chinese energy investment thanks to its rich resources, open foreign investment climate and stable regulatory environment. Analysts say that trend is set to accelerate after the Canadian government gave its blessing last week to CNOOC’s acquisition of Nexen, a Canadian oil company with assets around the world”.