Energy Blast – June 23, 2008

Deputy Prime Minister Igor Sechin, who oversees the energy sector, announced that he saw the row over TNK-BP “moving towards a resolution”, but the weekend saw further troubles for the company, with Moscow prosecutors accusing the company of violating local labour laws, and one UK newspaper is reporting that the Kremlin’s probe into TNK-BP was instigated by one of its Russian shareholders. “A quick resolution to the dispute is not being forecast by many Russia-watchers.” In an open letter to The Times, Stan Polovets of AAR insists that “the Russian investors in TNK-BP are acting like businessmen everywhere, pressing for maximum return on their investment and seeking to hold corporate managers accountable.” Another approach to the issue focuses on Alfa Group, which owns 25% of TNK-BP, and its “history of mud-slinging and controversy”. Gazprom Neft has outlined its plans to acquire more assets and expand outside Russia, including operations in Iran. Saudi Arabia may raise its oil production beyond its planned July increase if the oil market requires extra supply, despite continued protests from other OPEC members that an increase is “illogical”. Kuwait has also promised to raise output if required. The increase already made has not affected the rising oil price, and Saudi Arabia has called a brainstorming meeting to avoid taking the blame. Nigeria’s state oil firm NNPC has signed a $220 million financing deal with the local arm of Exxon Mobil.