Monday, May 28, 2007

How To Attract Foreign Investment

The Soviets Russians are busy re-writing the rules regarding foreign investment in that model republic.
The Russian government is pressing a bold strategy this spring to secure for Gazprom, the state natural gas company, a monopoly on exports of the fuel to Asia.

In the latest onslaught, Moscow is threatening one of the crown jewels of BP's global investments: the Kovykta gas field. And it is using methods similar to those deployed last fall to force Royal Dutch Shell to sell a controlling stake in another Far Eastern Russian energy development, the Sakhalin-2 project. In that case, too, Gazprom was the beneficiary.

On Monday, BP, which operates through a Russian joint venture, TNK-BP, moved closer to losing its license to the Kovykta field when a Siberian court declined to hear the company's arguments.

Kovykta is BP's largest natural gas project in Russia and valuable because it is within pipeline range of industrial cities in northeastern China.

At play, energy analysts say, is a Russian strategy to form a government monopoly on natural gas exports through Gazprom to Asia similar to what exists in Europe, with the scope and range to dictate prices and eliminate competition.

President Vladimir Putin has discussed playing the two markets off against each other in a grand form of haggling - though one that would depend on government control of the export routes.

That did not bode well for private energy companies operating in the country's Far East, like TNK-BP. Shell's ill-fated development, too, was aimed at the Asian market.
And some consider Putie a reformed communist.

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