Energy Blast – May 5, 2008

Russia’s emphasis on its booming commodities sectors could lead to an economic “dead end”, according to economy minister Elvira Nabiullina. With the state’s share of oil production at 44% (up from 6% in 2000) and the gas industry almost entirely in Gazprom’s hands, Dmitry Medvedev could be inheriting some serious problems. Russia’s crude export tax will increase by 17% to a record high of almost $400 per ton on June 1. The government has warned a unit of TNK-BP that it might lose oil-production rights after “gross violations” of licensing terms were found during an inspection. The US still hopes to send a pact on civilian nuclear cooperation with Russia to the US Congress in the next month. Deals to develop Iraq’s prized oil fields are expected to be signed in June by the world’s largest oil companies. The European Commission has suspended its review of plans by Austrian oil and gas group OMV to take over Hungarian peer MOL.