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Email this citationCIAO DATE: 04/05
Vladimir Putin and Russia’s Oil Policy
Martha Brill Olcott
February 2005
Abstract
The honeymoon between the Western oil industry and Russian President Vladimir Putin ended in mid-2003 when the Russian procurator’s office began arresting Yukos executives. The Kremlin’s seemingly sudden attack on private industry surprised the international business community that was expecting investment-friendly behavior from the Russian leadership. After assuming power in late 1999, Putin quickly signaled interest in developing a strong energy partnership with the United States, including increased opportunities for Western firms to invest in Russia’s oil and gas industry
While Western firm had found a very uneven playing field in Russia during the Yeltsin year, the fact that Putin appeared to have personally blessed the TNK’s 2003 merger with BP, 1 led some to hold out hopes that Putin’s second term would lead to new and better opportunities for western investment in Russia. The arrest of Yukos CEO Mikhail Khodorkovsky in October 2003, 2 however, triggered speculation that conditions in the second term might be even less advantageous to foreign investors, as it came at a time when Yukos’ principle owners and managers were engaged in possible merger talks with senior executives from both ChevronTexaco and ExxonMobile. 3
Endnotes
Note 1:“Price-fixing Row Over BP’s Russian Oil Deal,” The Guardian Newspapers, June 25, 2003. Back.
Note 2:Yukos CEO Mikhail Khodorkovsky was arrested on October 25, 2003 and was charges with violating seven articles of the Russian Federation Criminal Code, including personal income tax evasion, overseeing corporate tax evasion, non-compliance with a court judgement, falsifying documents, and theft. Russian Petroleum Investor, January 2004. See appendix 1 for biographical details. Back.
Note 3:Black, David. “Kremlin Threat to U.S.-Yukos Deal.” The Guardian. August 4, 2003. White, Gregory. “Yukos’ Legal Woes Continue Despite a Possible Exxon Deal.” Wall Street Journal. October 7, 2003. Warren, Susan, Gregory White, and Anita Raghavan. “Exxon Signals Interest in a Deal with Yukos.” Wall Street Journal/ December 12, 2003. Back.
