Fings Are Breaking All Over Russia
BP Sues TNK-BP Russia Partners Action Is to Recover $370 Million Debt; Venture Rift Widens
By GREGORY L. WHITE and GUY CHAZAN July 5, 2008; Page B6
MOSCOW — Fighting back amid a deepening rift within its TNK-BP Ltd. joint venture, BP PLC has sued its Russian partners to recover a $370 million debt.
—The Wall Street Journal
Vlad is at it again.
By “Vlad,” we refer to not to Vlad the Impaler—as Vlad III, Prince of Wallachia and reportedly the model for Dracula, was known—but Vladimir Putin, Ex-President of Russia and now its Prime Minister, who does things Vlad the Impaler did, only with slightly less bloodshed.
For his latest energy grab, The Wall Street Journal reports Putin is turning his attention to British Petroleum’s important Russian venture:
Relations between BP and its Russian partners have worsened sharply in recent months, with the Russians charging BP with mismanagement and the British company accusing its partners of trying to take over the 50-50 venture by stealth. The battle is playing out amid widespread expectations that a state-controlled company like OAO Gazprom ultimately is likely to take a stake in TNK-BP.
How important is TNK-BP to British Petroleum? Pretty bloody important: it accounts for one-quarter of BP’s worldwide oil production.
Without it, BP might have to change it’s name to “British Somewhat-Less Petroleum.”
We have, however, no doubt the whole thing will be settled amicably—which is to say Vlad will win. Not that we here at NotMakingThisUp are by any means geopolitical experts. It seems obvious that Russian interests tied to Putin’s Kremlin will eventually “acquire” BP’s interest in the same way those interests acquired Shell’s share of the Sakhalin gas project: by force masquerading as commerce.
To get a sense of why today’s headlines should have been no surprise to BP, let’s look back at that sorry Sakhalin episode, reported here for precisely the state-sanctioned thuggery that it was, orchestrated by the man whose eyes George Bush claimed to have peered into before famously announcing, “I was able to get a sense of his soul.”
Vladimir Putin, of course, has no soul: what Bush got a sense of was the ham sandwich Putin had eaten for lunch.
___________________________________________________________________ Tuesday, December 12, 2006 Fings Break in Russia, Don’t They? . Shell May Cede Control of Project To Russia’s Gazprom The “project” to which that headline in today’s Wall Street Journal refers is the Sakhalin-2, part of a 4.5 billion barrel-equivalent sub-Arctic oil and gas development off the coast of the former Soviet Union. Sakhalin is a large island: look it up on a map and you will see it actually appears to be an extension of the islands which constitute Japan. And that’s exactly how Japan thought of Sakhalin, too, until the Russians—pay attention here, we are making a point—forced out the Japanese at gunpoint after invading the island on August 11, 1945. Sharp-eyed readers will recognize that date as coming the week after Hiroshima and Nagasaki had been obliterated by atomic bombs.
Old Joe Stalin really knew how to hurt a guy when he was down! And so, it seems, does Vladimir Putin, today’s Strong Man at the Kremlin, who appears to have successfully muscled his country’s way into majority ownership of a major LNG project now that Shell has done much of the heavy lifting. Readers may recall that Royal Dutch Shell could certainly use its 55% stake in Sakhalin-2 to replenish so-called “proved” reserves that became distinctly unproven several years ago after it was discovered Shell’s engineers had been using Fannie-Mae-like juggling of its oil and gas reserves.
Which is to say, Royal Dutch’s bookkeepers were making them up. Smelling desperation, Putin’s men cleverly used a cost overrun for the Sakhalin-2 project as a device to muscle Shell out.
Like all good citizens with their backs to the wall in a dark alley and no recourse to either a gun or a passing officer, Shell is putting a very good face on the situation:
Shell has proposed ceding a controlling stake in the Sakhalin-2 project in Russia’s far east to state-run OAO Gazprom, an official close to the situation said. Another person close to the talks stressed they are continuing and an agreement hasn’t been reached… So this is what it’s come to in a country with the largest untapped reserves of energy in the world: muckraking journalists get shot, anti-Putin KGB veterans get poisoned, and major oil companies like Royal Dutch Shell get squeezed out of large energy projects in the manner of the old Monty Python “Army Protection Racket” bit, in which Luigi and Dino Vercotti pay a visit to a starchy old colonel: Dino: ‘Ow many tanks you got, colonel? Colonel: About five hundred altogether. Luigi: Five hundred! Hey! Dino: You ought to be careful, colonel. Colonel: We are careful, extremely careful. Dino: ‘Cos fings break, don’t they? Cononel: Break? Luigi: Well, everything breaks, dunnit colonel?
Fings are breaking in Russia too.
BP might be wishing they paid more attention.
Jeff Matthews I Am Not Making This Up © 2006, 2008 NotMakingThisUp, LLC
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