RUSSIA NATIONALIZES SHELL OILLooks like we need a neocon like Correa to slap Putins hand LOL
FOLKS.....AMERICAN FOLKS......IT'S ALL OVER FOR YOU. CANADIANS ARE WELCOMED (ARU) BUT AMERICANS CAN FOAD IT WOULD SEEM. NOW WHO IS RESPONSIBLE FOR THIS STITUATION....LET'S PLAY A GUESSING GAME
CORREA?
CHAVEX?
CASTRO?
MORALES?
SADDAM?
PUTIN?
BUSH?
https://www.resourceinvestor.com/pebble.asp?relid=27056
Putin's Resource Nationalism Forces Shell to Sell
By Cyril Widdershoven
11 Dec 2006 at 02:32 PM EST
AMSTERDAM (ResourceInvestor.com) -- The unexpected news that British-Dutch oil and gas major Royal Dutch Shell [NYSE:RDS-B; LSE:RDSA] has offered to cede control over its Russian venture in Sakhalin does not bode well for the international investment community in the country. International news sources have reported that Shell has offered the Russian government to cede control of the $22 billion Sakhalin-2 project, which has been always seen as one of Shell?s main core projects on which it is building its future.
At the same time, Shell?s defeat on the hands of Russia?s President Vladimir Putin shows Russia?s nationalistic economic politics to become stronger. Official sources have stated that the deal has been reached between Shell and the world?s largest gas company Russia?s Gazprom, but analysts see the latter development as victory of Russia?s ruling elite, currently being supported by Putin. After years of selling out to Russian oligarchs and international investors, Putin has been putting in place a totally nationalistic resource based policy, by which he wants to show that the Kremlin still holds real power, not the market economics introduced under his predecessors.
Shell?s defeat also could mean the start of an all-out war between Russia?s ruling nationalistic elite, which has been vying for a new power position of companies such as Gazprom and Rosneft, and the international investment community. The latter has been the main backer of Russia?s current economic growth, but could now be confronted by a position in which it will be receiving major losses or increased Russian participation in all projects in place or lined up for the coming years.
Reuters reported in the last hours that Shell has been in talks since weeks with the Russian government and Gazprom to solve its ongoing ?environmental conflict? regarding Sakhalin-2. Because several Russian government institutions have objected to Shell?s operations on Shakhalin-2, the project has been delayed, while several other oil and gas projects have been put on hold totally. Reuters also reported that Shell has committed itself to sell part of its current 55% equity stake in Sakhalin-2, which would be offered to Gazprom. Gazprom has been hunting Shell, and other European players in Russia?s hydrocarbon sector, such as [NYSE:TOT] and BP [NYSE:BP], for a partial retreat of Western interests.
In a reaction given by Jeroen van der Veer, CEO of Shell, stated that talks have been held but no information has been given regarding the outcome. Shell?s CEO has met with Gazprom head Alexei Miller in Moscow last week. Not only Shell?s Russian operations could now be under threat, as Gazprom will continue to keep the pressure on.
Analysts also expect that Miller, backed by Putin, will increase overall pressure on the British-Dutch major in a move to get an opening in another venture targeted by Gazprom for years, Shell?s American LNG operations. Until now, Shell has vigorously declined any moves this way but the Sakhalin-2 developments don?t bode well for this operation too. Several Russian government officials have stated that the Sakhalin-2 issue is not even solved yet, as environmental issues are still of concern. Based on independent assessments, this could mean that Sakhalin-2 keeps blocked as long as Shell is not willing to give Gazprom a stake in the U.S. re-gasification business too.
With Shell on its knees, the time could be right for Putin?s supporters to redirect part of their nationalistic efforts to other players in Russia. American sources have stated that a main target could be the immense investments and stakes held by the Anglo-Russian venture TNK-BP. Part of BP?s future growth depends on its Russian investments and potential production capacity of the TNK-BP venture. If this would come under pressure by Putin or Gazprom, the future of BP also could be partly in doubt.
Russian analysts have warned that growing resource nationalism in Russia is not based on commercial considerations but have been fed by the upcoming Russian general elections in December 2007. Putin supporters seem to be heading for all out control of the national hydrocarbon reserves largely to fund or support upcoming Putin successors. It seems that Putin has decided to revoke his former commitments to honour international agreements and to step into the same policy implemented by his predecessors, Gorbatshov and Jeltsin. Both former leaders needed a new oligarchy to build their respective power base on.
Russia?s energy sector is at present, next to its steel and metal sectors, the only viable economic sector on which future growth can be build upon. To hold the power in the latter sectors means holding the power in Russia. Shell, BP, Total and others will have to assess the current situation, partly lick their wounds and try to see if there is a future in Russia at all. For most operators no choice other than sucking up to Putin is there, even that cost overruns, diminishing profit margins or lower production shares will have a debilitating effect on share prices at present.
It seems that the oil war has started, this time not in the Middle East but in the East. Russia?s current drive to regain its position as power broker in the oil and gas sector has been promoted to full functionality. Hopefully, the latter will not mean that other producers (OPEC, Mexico, Angola, Egypt) will follow into the steps of Putin.
For consumer countries the current developments also don?t bode well. Gazprom?s stranglehold over Europe already has become a main geopolitical worry. Its increased power position in Russia?s crude oil sector, in combination with its already existing monopoly in natural gas, only will decrease Brussels powers to counter.
Shell has played a tough game, but as sometimes is the case in football, even when you play a super game, a referee (Putin) can change the game to the opposite. Offices in The Hague will be alight for several days, having consultants and managers trying to assess the situation. However, as long as investors don?t learn from their mistakes, national governments always will be able to gain the overhand.
Shell, BP and others are now paying the price of the combination of politically unwell Europe and commercial mistakes. The Russian bear has shown its claws again, and investors are currently retreating into their ?Shells.?