Kremlin urges state oil control

Nov 17, 2003 01:00 AM

by Stephen Dalziel

Russian Defence Minister Sergei Ivanov has waded into the row over oil giant Yukos by calling for more state control over Russia's energy reserves. Mr Ivanov said oil companies including Yukos were under-investing in exploring for new oil.
Mr Ivanov is one of the closest allies of President Vladimir Putin. Yukos has been in the spotlight ever since ex-boss Mikhail Khodorkovsky was arrested for fraud last month.

Mr Ivanov's intervention is significant because as defence minister, he tends to keep his pronouncements to military matters. But as one of the closest allies of the President, Vladimir Putin, when he ventures off this subject there can be little doubt that he is expressing an official, not merely a personal, opinion.
So his blunt statement that strategic reserves, and notably oil, should come under tighter state control will be seen as a warning of possibly greater state interference in the hitherto independent oil companies.

In the past few months, the Yukos oil company has been subjected to raids on its premises by the tax police, and two of its leading figures, Platon Lebedev and Mikhail Khodorkovsky, have been arrested.
Also, news came through that the department of the Interior Ministry responsible for combating organised crime is considering pressing criminal charges against two other oil companies, Sibneft and Rosneft. Sibneft is joining with Yukos to create Russia's largest oil company.

Mr Ivanov claims that the oil companies are not investing enough in exploring for new reserves, and says that the oil currently being produced is thanks to work carried out in the Soviet era. Many in the oil community would dispute this.
In 1995, when Mr Khodorkovsky took over state assets to form Yukos, it was making huge losses; it's now so profitable that there's serious interest from the American oil giant, ExxonMobil. But perhaps therein lies another Kremlin fear: too much control of Russia's resources by foreigners.

Stephen Dalziel is the BBC’s Russian affairs analyst.

Source: BBC
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