This tidbit of info may help in removing an obstacle to transporting.
By Lynnley Browning
MOSCOW, Nov 5 (Reuters) - Russian President Boris Yeltsin,
in one of his boldest but potentially most contentious economic
reforms to date, has signed a decree allowing foreigners to take
total control of domestic oil companies.
The move in theory fully opens up energy firms in the
world's third largest oil-producing country to foreigners, who
had previously been limited to a 15 percent stake in companies
in the strategic sector.
But it is also certain to unleash storms of protest from the
opposition-dominated parliament over foreign ownership of one of
Russia's most important industries -- as well as scepticism
among foreign oil majors, whose projects here are floundering.
"It will be contentious," said Julian Lee of the Centre for
Global Energy Studies in London. "It's difficult to say whether
it will stand the passage of time."
Fuel and Energy Minister Boris Nemtsov, who told Reuters on
Wednesday of the decree, said the document, signed on Tuesday,
covered all domestic oil firms. Asked if foreigners could buy
100 percent of any oil firm, Nemtsov said, "Yes, they can."
Yeltsin has already reshaped the once fully state-owned oil
sector with a series of decrees since 1992, setting up
individual firms with production, refining and marketing units.
At the same time, foreign oil firms from Houston to Tokyo
have long eyed Russia's black gold, which accounts for five
percent of world oil reserves and 10 percent of global output.
But they have seen the majority of their $70 billion or so
in existing and planned projects stymied or halted outright over
red tape -- or, worse, simply cancelled.
"Will Western oil companies be interested in buying Russian
oil companies? Of course they will," said a top Western industry
source. "Whether they choose to participate is another matter."
In a separate decree, Yeltsin sacked wealthy oil, auto and
media magnate Boris Berezovsky from his post on the Kremlin's
Security Council on Wednesday. Berezovsky controls the Sibneft
oil mini-major and was intending to bid for Rosneft, the last
big oil company due to be privatised.
Russia has been ambivalent about foreign participation in
its oil industry, which accounts for nearly three-quarters of
its hard currency export earnings.
On the one hand, the sector is among the most privatised in
Russia. Some companies, like LUKoil <LKOH.RTS>, which is
Russia's largest crude producer and holds reserves that are
among the biggest in the world, have become corporate stars,
attracting shareholders like ARCO <ARC.N>.
Moscow has said repeatedly it must work with foreign oil
companies if it is to reverse a decade of steep output declines
and attract investment to tap its costly Siberian reserves.
On the other hand, Russian oil companies, which once viewed
their Western cousins as necessary to future prosperity but are
now allied with domestic banks, are seen wanting to go it alone.
Amoco <AN.N> is at an impasse in its talks on a $50 billion
project to tap the Priobsk field. And in a move which
flabbergasted investors, the Natural Resources Ministry last
August simply cancelled Exxon's <XON.N> right, won through a
tender, to develop a major deposit.
Yeltsin's decree comes just as parliament admits that the
only way to finance next year's budget deficit may be by
accelerating privatisation -- and that making the sell-off more
open to foreigners may be the only way to bring home the bacon.
Vladimir Tumarkin, an aide to the board chairman of Rosneft,
the prized state oil holding firm to be privatised in 1998, said
Yeltsin and the reformist cabinet were seeking to sell off as
many companies before next year, when he said parliament would
have to approve each privatisation.
A senior privatisation official said on Wednesday that
Moscow planned to sell 16 percent of LUKoil and 19 percent of
Russian-Belarussian oil joint venture Slavneft, both this year.
Foreign firms are alreadyogling Rosneft -- and Yeltsin's
decree could make it even more attractive. "It will open up
bidding for Rosneft quite considerably," Lee said.
But he questioned whether foreign oil firms would in general
rush in on the wings of the presidential decree.
"They could find," he said, "that life does not get a great
deal easier in terms of the political opposition they face."
REUTERS
Rtr 11:29 11-05-97
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