payday loans

The Last Stand:ExxonMobil’s Sakhalin I

US President George W Bush may bring up the issue of ExxonMobil when he meets Russian President Vladimir Putin at the Bush family's oceanfront estate in Kennebunkport, Maine on July 1-2.

A spokesman for the Kremlin leader denied on June 28 the Kremlin is involved in a disagreement between Russian gas monopoly Gazprom and US oil and gas major ExxonMobil over Sakhalin I, but the recent pattern of the Russian government muscling away the foreign companies' assets point at the Kremlin hand.

"It will be wrong to say the Kremlin is somehow involved," Dmitry Peskov, the Kremlin's first deputy press attache, was quoted by the press as telling journalists during a phone briefing. "Gazprom is a Russian company. Kremlin is the state. You have to divide Kremlin and Gazprom."

Gazprom took aim at ExxonMobil's Sakhalin I project on June 26, only days after gaining control of TNK-BP's massive Kovykta Siberian field.

The Russian gas giant urged state representatives on the authorised state body for the Sakhalin I to make it a priority to supply Sakhalin gas to the domestic market, when voting on gas exports to China.

Along with representatives from the project, the authorised body for the Sakhalin I production sharing agreement contains state representatives. Viktor, Timoshilov, the man responsible for Gazprom's export policy, was quoted as saying by the press on June 26 that the state should ensure that state representatives should express their position, and give priority to meeting domestic demand.

Gazprom Deputy CEO and Gazprom Export Director General Alexander Medvedev said that for Gazprom, when it comes to using Sakhalin gas, supplies to the domestic market and expanding gas liquefaction projects are a priority. He also said that the plans by Sakhalin I participants to independently sell gas in China are complicating Gazprom's negotiations to supply gas to China.

"Obviously they don't need the gas for the local market, that is a bunch of hot air," Fadel Gheit, oil analyst at Oppenheimer and Co, in New York told New Europe on June 28.

Gazprom pressure on ExxonMobil is seen as a continuation of the Russian government's policy to strengthen its control over the country's strategic assets. "It's a long-term strategy of gaining certain control over their (Russia's) assets that are considered strategic and rightfully so. They want to use energy as a true political weapon. They can put pressure on Europe, they can put pressure on China -- not through military threats but through energy supply," he said.

"This is the last stand. Exxon is the toughest so they basically tried the ones that are easier to push over," Gheit said, referring to Shell's Sakhalin II and TNK-BP's Kovykta. Exxon is extremely careful not to make any violations that would give the Russian authorities an excuse to take control of the project.

"Look what happened in Venezuela. I mean at least Russia is paying these companies compensation. I'm very glad that CococoPhilips and Exxon both walked away from Venezuela. It should teach them a lesson. But the situation with Russia is different," Gheit said.

Foreign companies cannot walk away from Russia because their investment is too big and the country's rich energy reserves simply too appealing. "You don't walk away from Russia," Gheit said. "They have a huge investment in Russia, billions of dollars and it's the upside potential."

The deepest well drilled in the world is the Exxon-led Sakhalin I at 37,016 feet.

Russia, which is rich in energy resources, appears to have won the energy power game. "Those who have access to recourses, those who control the resources will win the game because the power has already shifted. It's not in the hands of Exxon anymore, not in the hands of Shell or BP or anybody. It's in the hands of the government who controls the resources. So they control the resources, they have the power, they can get whatever they want," Gheit told New Europe.

But Russia also risks pushing the envelope too far. If Russia is boycotted by all foreign companies there will be no Russian energy industry. Gazprom and LUKoil cannot pull it off alone. "They just can't. They need international cooperation from the major oil companies and if they keep alienating all these companies, one after the other, things will change and it is not going to be in the interest of Russia. I hope they don't play their card too far and they push these companies too much because the ramifications will be pretty bad," Gheit said.

2 Responses to “The Last Stand:ExxonMobil’s Sakhalin I”

  1. 360Dolphin.com Says:

    Trading In Sympathy - Stock Investment Buying Odds?…

    Your research continues to review the company itself. Stock Assault is very famous, it has lots of media coverage from CNN, Bloomberg, Indiana Times, InfoWorld, Business Week to MSNBC media. Now can be to say that everyday will likely a 300% day?…

  2. gaga????? Says:


    2007 June archive | Yuzno.com…

≡ Leave a Reply

Copyright © 2021 Yuzno.com | Yuzno.com is supported by WP + USB. Designed by milo.
| News RSS | Comments RSS.