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Offshore Wars and Distribution of New Oil and Gas Blocks

Offshore Wars and Distribution of New Oil and Gas Blocks

The fight for property is not over in Russia – it is just getting a little less public, but no less dramatic. The heat remains, although the scheme of the distribution of assets has changed.

While private corporations just beginning to take shape fought for state property in the 1990s, state-run corporations and political clans behind them were taking away assets from private owners in the 2000s, most wars now are between state-run corporations themselves.

Interestingly enough, the fighting is often for property that has not yet formally been distributed. Special attention is attracted by fields that are so far owned by the state. They are the future of the oil and gas industry, and this future is being actively transferred to state companies. The majority of such fields are on the continental shelf that was almost entirely unexplored in the Soviet period. Now it is becoming the principal hope of the Russian fuel and energy sector. It is expected to enable both an increase in reserves and new upstream projects.

Formally, the government transfers its assets to government-run companies, yet not everything is that simple in reality. The buyout price is symbolic, while state companies have a considerable portion of private shareholders which in a number of cases can become even bigger. Besides, the question arises whether state companies are capable of developing the fields they receive and who will be their partners.

The report offers an in-depth discussion of the following subjects:

  • The condition of the stock of resources in the Russian oil and gas industry.

    • The ratio of proven and unproven reserves, offshore and onshore fields.
  • The Putin-sponsored system of distributing deposits of hydrocarbons and its most recent transformations.

    • The deferred privatisation of reserves from the undistributed stock in favour of the Putin-sponsored clans.
    • The main political rules for handing out licences.
  • The key groups of bureaucrats and politicians in the struggle for the undistributed stock of mineral resources; the leverage they use.

    • Political clans in battles for the continental shelf.
    • The groups’ use of a system of allies in relevant ministries and agencies.
    • The legal framework for operating on the continental shelf and in Eastern Siberia; the principal beneficiaries of the new regulatory framework.
  • The role of foreign companies in the struggle for the undistributed fields.

  • The main fields of bureaucratic battles:

    • the continental shelf
    • the Far East
    • Eastern Siberia
    • Timan-Pechora
  • A medium-term forecast of developments


The contents of the report:

Introduction 2
Chapter 1. Condition of Stock of Resources in Russian Oil & Gas Industry 3
Chapter 2. Putin-sponsored System of Distributing Deposits of Hydrocarbons and Its Most Recent Transformations 14
2.1. Selection of Contenders for Undistributed Stock 14
2.2. New Rules of the Game Become Law 22
2.3. Who Lays Claim to Mineral Resources? Gradual Privatisation of State-owned Companies 28
2.4. Tug-of-war between Clans 31
Chapter 3. Fight for Promising Undistributed Fields 40
3.1. Delineation of Undistributed Stock Boundaries 40
3.2. Far East 41
3.3. Western Siberia 46
3.4. Eastern Siberia 46
3.5. Timan-Pechora 49
Chapter 4. Possible developments 52
Date of issue September 7, 2009

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