Neil Buckley in the FT has written some sharp analysis this week on the recent $55 billion deal that saw both of the interests previously controlling TNK-BP falling under the control of Rosneft and its overlord, the Kremlin. The move is dubious on a number of counts, says Buckley. Igor Sechin’s lack of direct industry experience means that ‘the rise of Rosneft seems intimately linked with that of Mr Sechin personally.‘ And the sheer gargantuan size of the new Rosneft (the world’s largest energy company in terms of output) will give it an unprecedented advantage over ‘everything from the best acreage to oilfield services‘.
[...] it strains credibility that Mr Putin would allow Russia’s national oil champion to spend $55bn – half of it going to the oligarchs – simply to help a foreign investor swap a turbulent private alliance for one with state-owned Rosneft.
The suggestion that it goes against the trend is also disingenuous. Russia’s government does indeed want to reduce the state’s role in the economy more broadly. But the movement in the oil industry in the Putin years has been almost entirely the other way.
After a final privatisation in 2002 of Slavneft, the proportion of Russian oil output from state-controlled companies fell to 10 per cent. The Rosneft deal will take the state’s share back above 50 per cent.