Description
anlyses FDI in Russia and challenges ahead. It includes risks of investing on Russia, present FDI scenario in Russia, future outlook of Russia
ABOUT CASE
• Russia was experiencing unprecedented capital flight 5 yrs after Soviet Collapse
•
• • •
Investment from FDI lower than smaller former communist state, Hungary
Consistently tops the charts as the riskiest investment destination Weak enforcement & ever-changing legislation Privatization laws tended to discriminate against foreign investors
•
• • •
Russian govt. favoured local companies
Large companies sold for fraction of their market value Russian O&G industry needs capital resources for infrastructure upgrade Russian oil output plummeted after the collapse of the Soviet Union
•
• •
In 1997, Boris Yeltsin govt. opened Russia's O&G industry to foreign investment
Entry of Royal Dutch Shell & British Petroleum into Russia However, Western companies wanted stronger legal and tax guarantees & international production sharing agreements
FLOW OF PRESENTATION
Introduction Risks of Investing in Russia Investments in Russian O&G Industry
Present FDI Scenario
Future Outlook/Facing the Risks
FLOW OF PRESENTATION
Introduction Risks of Investing in Russia Investments in Russian O&G Industry
Present FDI Scenario
Future Outlook/Facing the Risks
ABOUT RUSSIA
• Largest country in the world
•
• •
Ninth most populous nation in the world as of 2012
Russian economy is the world's ninth largest by nominal GDP and sixth largest by purchasing power parity One of the world's fastest growing major economies (GDP- USD 1.8 Trillion)
•
• •
A permanent member of the United Nations Security Council, a member of the G8, G20, Council of Europe, WTO, leading member of CIS
Main element of Former Communist USSR Government - Federal semi-presidential constitutional republic
President - Vladimir Putin,
Prime Minister - Dmitry Medvedev
* Source: CIA World Fact book (2012)
ABOUT RUSSIA
RUSSIAN OIL & GAS INDUSTRY
World's largest reserves of mineral and energy resources
Largest producer of oil & natural gas globally as of 2012 (12% of world’s oil) Oil and gas only contribute to 5.7% of Russia's GDP
Largest exporter of natural gas
RUSSIAN OIL & GAS INDUSTRY
Rank 1 2 3 4 5 6 7 8 Company Gazprom Rosneft Lukoil Surgutneftegas TNK-BP Holding Gazprom Neft Novatek Tatneft
Market Cap (USD billion)
348 73 65 36 28 28 15 10
Proved Crude Oil Reserves Proved Gas Reserves (bln cubic meters) (bln barrels)
5.9 15.9 15.7 Does not disclose 10.3 6.9 -5.9 18,200 701 765 ---690 37.4
FDI SCENARIO IN RUSSIA
• • • Russian FDI Rose to $18.4 Billion in 2011 Russia joined WTO in Aug 2012 Concerns remain about the country’s bureaucracy, ineffective legislation and lack of business regulation transparency, corruption & old infrastructure FDI that arrives in Russia is heavily concentrated in relatively few regions like Moscow, St. Petersberg
•
• Source:http://inaudit.com/reports/positive-outlook-for-russian-inward-investment-as-it-joins-wto-24658/ • Growing opportunities - Russia FDI report 2011 - Ernst & Young
NEED OF FDI
• Lack of Capital resources to upgrade its crumbling infrastructure
-
Leaking pipelines
- Aging oil wells - A lack of new drilling Conflicts between former USSR states over ownership of oil and gas infrastructure
•
FDI will also bring advanced technology and experience
FLOW OF PRESENTATION
Introduction Risks of Investing in Russia Investments in Russian O&G Industry
Present FDI Scenario
Future Outlook/Facing the Risks
POLITICAL RISKS
• • • • • • • • Fear of outright expropriation of oil and gas projects creeping expropriation Example, contract cancellation threats to Total & Exxon Mobil, forced shell & BP to relinquish projects Nationalization of entire industry Force majeure Continuous changes in top leadership Privatization that took place produces an example of conspiracy Other factors like chechenya crisis
ECONOMICAL RISKS
Russian Financial Crisis of 1998:
• • • • • GDP declined from $428 billion to $282 billion Inability of Russian banks to meet their debt obligations and government's suspension of foreign debt payments caused many investors to flee In 1999 total foreign investments fell by 44.5 % to mere $4.27 billion Due to this Russia, which already heavily depended on tax revenues and export earnings from its oil and gas industry, had to place an additional burden on that sector regulatory and legal risks
POLICY EXECUTION RISKS
Privatization of Russia’s Oil & Gas Sector:
• • • • • • Program launched through law on underground resources Initially the privatization was partial Foreign ownership was limited to 15% Loan for shares scheme Resulted in transfer of control of these companies to financial industrial groups Ownership of these financial groups and the VICs has substantially remained in the hands of the former Soviet oil and gas elite Examples:- Lukoil CEO Alekperov, Yukos CEO Mikhail Khodorkhovsky, president of gazprom Rem Viakhirev Rumors about deprivatization
•
OPERATIONAL RISKS
Russia’s Oil Pipelines:
• •
•
•
•
National oil pipelines owned and controlled by federal monopoly, Transneft Transports about 93% of oil produced in Russia and company exercises complete control over the access to pipelines This monopoly allows the government to charge extra fees, which was considered as 'backdoor taxation‘ Absence of regulatory requirements that would compel the oil pipeline monopoly to allow transport of extracted oil through its pipelines deterred potential investors from participating in Russia's oil exploration projects Allegations abound that it has accepted bribes for the use of its pipelines at around $2 to $3 per ton of oil
FLOW OF PRESENTATION
Introduction Risks of Investing in Russia Investments in Russian O&G Industry
Present FDI Scenario
Future Outlook/Facing the Risks
INVESTMENTS IN RUSSIAN OIL INDUSTRY
Buying stakes in Russian companies Project Financing under PSA Deals
BUYING STAKES IN RUSSIAN COMPANIES
November 1997, Shell invested around $1 billion in Gazprom BP bought a ten percent stake in AO Sidanko and twenty percent stake in eastern Siberian gas fields, controlled by Sidanko • 1995 deal between Arco and Lukoil, in which Arco bought in Lukoil that gave Arco a 7.99% stake in Lukoil • Lack of transparency of the companies and the resulting speculation about the companies' assets and financial position • • • • • • Sidanko became subject to bankruptcy proceedings in 1998 Settlement with government, TNK seized two of the best production subsidiaries of Sidanko, Kondpetroleum and Chernogorneftegaz BP Amoco protested which led to litigations TNK and BP finally reached an agreement in 2001 to jointly own and run Sidanko (TNK owns eighty-four percent and BP owns ten percent of Sidanko)
PROJECT FINANCING UNDER PSA DEALS
• PSA (Production-Sharing Agreement): contract between the state and an investor • Defines the terms and condition for exploration and taxes • Terms defined in the PSA supersede laws defined in the status quo • Makes many long term, typically high risk projects possible
HISTORY OF PSAs IN RUSSIA
• PSAs in Russia were created under Yeltsin (law signed in 1995 and took effect in 1996) • Three PSAs operating currently
• • • Sakhalin 1 – ExxonMobil Sakhalin 2 – Shell Kharyaga – Total
• PSAs used in other former Soviet countries (Azerbaijan and Kazakhstan)
PSA STRUCTURE
• Government retains the rights and ownership of the oil and gas resources
•
• • • •
Company provides all capital
Payments at specified points in the project and royalty payments (6% in Sakhalin) After the capital investment is recouped, profit is shared between the government (Russian federation and regional Sakhalin Oblast) and the company The government share increases as the project progresses (up to 70%) The company pays tax on the profit that it makes
SAKHALIN-2 AND SHELL
• Island off the east coast of Russia
• Estimated 14 billion barrels & 96 trillion cubic feet natural gas
• Developed by Shell, Mitsubishi, Mitsui • Operate as Sakhalin Energy
• Foreign investment accomplished though PSA contract
SAKHALIN-2 CURRENT ISSUES
• • • In Fall 2006, Natural Resource Ministry (NRM) says project violating multiple environmental standards Project must be reviewed and approved before work is continued Could result in suspension of project, which will add to overall costs
CHALLENGES
Weak protection of shareholders' rights:
• • Yukos, Russia's second largest oil company, was involved in litigation with its Western minority shareholders, led by Kenneth Dart Dart is believed to hold between twelve and fourteen percent of Samaraneftegaz, Tomskneft, and Yuganskneftegaz, three of Yukos's drilling subsidiaries
•
• •
The additional shares were issued at a meeting to which Western shareholders were denied admission
Dart sued Yukos and secured six international injunctions to stop the transfer of the newly issued shares On June 28, 1999 Dart won his first legal battle in the Samara court in Russia after which they settled for confidential agreement
CHALLENGES
Corruption at all Levels:
• • • According to the estimation of Swedish economist Anders Åslund, 50% of the state-owned Gazprom's investments are lost through corrupt practices For instance, the Russian section of Blue Stream pipeline was three times more expensive to construct per kilometer than the Turkish section of the pipeline Oil-for-Food Programme : The Russian government and Russian energy companies were beneficiaries in the Oil-for-Food Programme
Disputes with Neighbouring Countries:
• Russia has disputes with countries Azerbaijan and Armenia, Belarus, Czech Republic, Georgia, Lithuania, Poland, Ukraine over issues like gas prices, transit lines, export policies and others
CHALLENGES
Energy as a foreign policy tool:
•
Russia has recently been accused of using its natural resources as a policy tool to be wielded against offending states like Georgia, Ukraine, and other states it perceives as hindrances to its power
Was it Really Environmental?
• • •
Analysts speculate that the govt. actions weren’t motivated by environmental concerns Motivated by government desire to give Gazprom a bigger share In 2005, Shell offered 25% of share to state-run company Gazprom for a 50% share in a Gazprom field
FLOW OF PRESENTATION
Introduction Risks of Investing in Russia Investments in Russian O&G Industry
Present FDI Scenario
Future Outlook/Facing the Risks
CHANGING TRENDS
• EU is largest investor in Russia
•
• •
The economy of Russia is the ninth largest economy in the world by nominal value and the sixth largest by purchasing power parity
In 2011 Russia’s gross domestic product grew by 4.2 percent, the world’s third highest growth rate among leading economies Russia FDI grew to $41.2 billion in 2010
TNK-BP
• • • On 1 September 2003, BP and AAR announced the creation of a strategic partnership to jointly hold their oil assets in Russia and Ukraine BP and AAR each own 50% of TNK-BP International Limited, which in turn owns 95% of TNKBP holding, with the other 5% floating freely on public markets In January 2011, BP and Russia's state oil company, Rosneft, formed a strategic partnership on Arctic development
•
•
In March 2011 the Stockholm International Arbitration court blocked the BP-Rosneft deal as breaching TNK–BP earlier contractual arrangements.
AAR's legal action led to the collapse of the BP-Rosneft deal in August 2011, when BP was replaced with ExxonMobil as Rosneft's strategic foreign partner in the Arctic
SAKHALIN 1
• • • • • • Sakhalin Island and immediately offshore, in the Okhotsk Sea, from three fields: Chayvo, Odoptu, and Arkutun-Dagi Exxon-Neftgas Ltd. (ENL) ENLRN-Astra (8.5%) and Sakhalinmorneftegas-Shelf (11.5%); The Japanese consortium SODECO (30%); Indian state-owned oil company ONGC Videsh Ltd. (20%); ExxonMobil (30%) Oil production rates of 250,000 barrels
SAKHALIN 2
• The consortium Sakhalin Energy had a contract to produce gas without a local partner.
•
•
However, in 2005–2006 the consortium was heavily criticized due to environmental issues and the legal proceeding on violation of the Russian environmental regulations were initiated.
Under legal and political pressure, the consortium was forced to sell a majority stake to Gazprom. On 21 December 2006, Gazprom took control over a 50%-plus-one-share stake in the project by signing an agreement with Royal Dutch Shell.
•
Energy analysts believed alleged violations of the environmental regulations were a pretext by the Russian government to pressure Sakhalin Energy to sell a large stake to Gazprom
Gazprom Sakhalin Holdings B.V. (subsidiary of Gazprom) - 50% plus 1 share Shell Sakhalin Holdings B.V. (subsidiary of Royal Dutch Shell) - 27.5% minus 1 share Mitsui Sakhalin Holdings B.V. (subsidiary of Mitsui)- 12.5% Diamond Gas Sakhalin (subsidiary of Mitsubishi) - 10%
• • • •
POLITICAL CONNECTIONS OF GAZPROM
• Worlds largest natural gas company which controls 16% of worlds natural gas reserve
•
• • •
Contributes 64% of total exports from Russia in 2007
Government of Russia holds 50.01% stakes EU is dependent on Gazprom for its gas supplies Was expected to become $ 1 trillion and largest corporation in world by 2010 before financial meltdown
GAZPROM AND RUSSIA
Valdimir Putin Shareholder of Gazprom, Former Prime Minister of Russia, Current President of Russia
Victor Zubkov Current Chairman of Gazprom, Former Prime Minister of Russia
Dmitry Medvedev Former Charmain of Gazprom, Former President of Russia, Current Prime Minister of Russia
doc_763598131.pptx
anlyses FDI in Russia and challenges ahead. It includes risks of investing on Russia, present FDI scenario in Russia, future outlook of Russia
ABOUT CASE
• Russia was experiencing unprecedented capital flight 5 yrs after Soviet Collapse
•
• • •
Investment from FDI lower than smaller former communist state, Hungary
Consistently tops the charts as the riskiest investment destination Weak enforcement & ever-changing legislation Privatization laws tended to discriminate against foreign investors
•
• • •
Russian govt. favoured local companies
Large companies sold for fraction of their market value Russian O&G industry needs capital resources for infrastructure upgrade Russian oil output plummeted after the collapse of the Soviet Union
•
• •
In 1997, Boris Yeltsin govt. opened Russia's O&G industry to foreign investment
Entry of Royal Dutch Shell & British Petroleum into Russia However, Western companies wanted stronger legal and tax guarantees & international production sharing agreements
FLOW OF PRESENTATION
Introduction Risks of Investing in Russia Investments in Russian O&G Industry
Present FDI Scenario
Future Outlook/Facing the Risks
FLOW OF PRESENTATION
Introduction Risks of Investing in Russia Investments in Russian O&G Industry
Present FDI Scenario
Future Outlook/Facing the Risks
ABOUT RUSSIA
• Largest country in the world
•
• •
Ninth most populous nation in the world as of 2012
Russian economy is the world's ninth largest by nominal GDP and sixth largest by purchasing power parity One of the world's fastest growing major economies (GDP- USD 1.8 Trillion)
•
• •
A permanent member of the United Nations Security Council, a member of the G8, G20, Council of Europe, WTO, leading member of CIS
Main element of Former Communist USSR Government - Federal semi-presidential constitutional republic
President - Vladimir Putin,
Prime Minister - Dmitry Medvedev
* Source: CIA World Fact book (2012)
ABOUT RUSSIA
RUSSIAN OIL & GAS INDUSTRY
World's largest reserves of mineral and energy resources
Largest producer of oil & natural gas globally as of 2012 (12% of world’s oil) Oil and gas only contribute to 5.7% of Russia's GDP
Largest exporter of natural gas
RUSSIAN OIL & GAS INDUSTRY
Rank 1 2 3 4 5 6 7 8 Company Gazprom Rosneft Lukoil Surgutneftegas TNK-BP Holding Gazprom Neft Novatek Tatneft
Market Cap (USD billion)
348 73 65 36 28 28 15 10
Proved Crude Oil Reserves Proved Gas Reserves (bln cubic meters) (bln barrels)
5.9 15.9 15.7 Does not disclose 10.3 6.9 -5.9 18,200 701 765 ---690 37.4
FDI SCENARIO IN RUSSIA
• • • Russian FDI Rose to $18.4 Billion in 2011 Russia joined WTO in Aug 2012 Concerns remain about the country’s bureaucracy, ineffective legislation and lack of business regulation transparency, corruption & old infrastructure FDI that arrives in Russia is heavily concentrated in relatively few regions like Moscow, St. Petersberg
•
• Source:http://inaudit.com/reports/positive-outlook-for-russian-inward-investment-as-it-joins-wto-24658/ • Growing opportunities - Russia FDI report 2011 - Ernst & Young
NEED OF FDI
• Lack of Capital resources to upgrade its crumbling infrastructure
-
Leaking pipelines
- Aging oil wells - A lack of new drilling Conflicts between former USSR states over ownership of oil and gas infrastructure
•
FDI will also bring advanced technology and experience
FLOW OF PRESENTATION
Introduction Risks of Investing in Russia Investments in Russian O&G Industry
Present FDI Scenario
Future Outlook/Facing the Risks
POLITICAL RISKS
• • • • • • • • Fear of outright expropriation of oil and gas projects creeping expropriation Example, contract cancellation threats to Total & Exxon Mobil, forced shell & BP to relinquish projects Nationalization of entire industry Force majeure Continuous changes in top leadership Privatization that took place produces an example of conspiracy Other factors like chechenya crisis
ECONOMICAL RISKS
Russian Financial Crisis of 1998:
• • • • • GDP declined from $428 billion to $282 billion Inability of Russian banks to meet their debt obligations and government's suspension of foreign debt payments caused many investors to flee In 1999 total foreign investments fell by 44.5 % to mere $4.27 billion Due to this Russia, which already heavily depended on tax revenues and export earnings from its oil and gas industry, had to place an additional burden on that sector regulatory and legal risks
POLICY EXECUTION RISKS
Privatization of Russia’s Oil & Gas Sector:
• • • • • • Program launched through law on underground resources Initially the privatization was partial Foreign ownership was limited to 15% Loan for shares scheme Resulted in transfer of control of these companies to financial industrial groups Ownership of these financial groups and the VICs has substantially remained in the hands of the former Soviet oil and gas elite Examples:- Lukoil CEO Alekperov, Yukos CEO Mikhail Khodorkhovsky, president of gazprom Rem Viakhirev Rumors about deprivatization
•
OPERATIONAL RISKS
Russia’s Oil Pipelines:
• •
•
•
•
National oil pipelines owned and controlled by federal monopoly, Transneft Transports about 93% of oil produced in Russia and company exercises complete control over the access to pipelines This monopoly allows the government to charge extra fees, which was considered as 'backdoor taxation‘ Absence of regulatory requirements that would compel the oil pipeline monopoly to allow transport of extracted oil through its pipelines deterred potential investors from participating in Russia's oil exploration projects Allegations abound that it has accepted bribes for the use of its pipelines at around $2 to $3 per ton of oil
FLOW OF PRESENTATION
Introduction Risks of Investing in Russia Investments in Russian O&G Industry
Present FDI Scenario
Future Outlook/Facing the Risks
INVESTMENTS IN RUSSIAN OIL INDUSTRY
Buying stakes in Russian companies Project Financing under PSA Deals
BUYING STAKES IN RUSSIAN COMPANIES
November 1997, Shell invested around $1 billion in Gazprom BP bought a ten percent stake in AO Sidanko and twenty percent stake in eastern Siberian gas fields, controlled by Sidanko • 1995 deal between Arco and Lukoil, in which Arco bought in Lukoil that gave Arco a 7.99% stake in Lukoil • Lack of transparency of the companies and the resulting speculation about the companies' assets and financial position • • • • • • Sidanko became subject to bankruptcy proceedings in 1998 Settlement with government, TNK seized two of the best production subsidiaries of Sidanko, Kondpetroleum and Chernogorneftegaz BP Amoco protested which led to litigations TNK and BP finally reached an agreement in 2001 to jointly own and run Sidanko (TNK owns eighty-four percent and BP owns ten percent of Sidanko)
PROJECT FINANCING UNDER PSA DEALS
• PSA (Production-Sharing Agreement): contract between the state and an investor • Defines the terms and condition for exploration and taxes • Terms defined in the PSA supersede laws defined in the status quo • Makes many long term, typically high risk projects possible
HISTORY OF PSAs IN RUSSIA
• PSAs in Russia were created under Yeltsin (law signed in 1995 and took effect in 1996) • Three PSAs operating currently
• • • Sakhalin 1 – ExxonMobil Sakhalin 2 – Shell Kharyaga – Total
• PSAs used in other former Soviet countries (Azerbaijan and Kazakhstan)
PSA STRUCTURE
• Government retains the rights and ownership of the oil and gas resources
•
• • • •
Company provides all capital
Payments at specified points in the project and royalty payments (6% in Sakhalin) After the capital investment is recouped, profit is shared between the government (Russian federation and regional Sakhalin Oblast) and the company The government share increases as the project progresses (up to 70%) The company pays tax on the profit that it makes
SAKHALIN-2 AND SHELL
• Island off the east coast of Russia
• Estimated 14 billion barrels & 96 trillion cubic feet natural gas
• Developed by Shell, Mitsubishi, Mitsui • Operate as Sakhalin Energy
• Foreign investment accomplished though PSA contract
SAKHALIN-2 CURRENT ISSUES
• • • In Fall 2006, Natural Resource Ministry (NRM) says project violating multiple environmental standards Project must be reviewed and approved before work is continued Could result in suspension of project, which will add to overall costs
CHALLENGES
Weak protection of shareholders' rights:
• • Yukos, Russia's second largest oil company, was involved in litigation with its Western minority shareholders, led by Kenneth Dart Dart is believed to hold between twelve and fourteen percent of Samaraneftegaz, Tomskneft, and Yuganskneftegaz, three of Yukos's drilling subsidiaries
•
• •
The additional shares were issued at a meeting to which Western shareholders were denied admission
Dart sued Yukos and secured six international injunctions to stop the transfer of the newly issued shares On June 28, 1999 Dart won his first legal battle in the Samara court in Russia after which they settled for confidential agreement
CHALLENGES
Corruption at all Levels:
• • • According to the estimation of Swedish economist Anders Åslund, 50% of the state-owned Gazprom's investments are lost through corrupt practices For instance, the Russian section of Blue Stream pipeline was three times more expensive to construct per kilometer than the Turkish section of the pipeline Oil-for-Food Programme : The Russian government and Russian energy companies were beneficiaries in the Oil-for-Food Programme
Disputes with Neighbouring Countries:
• Russia has disputes with countries Azerbaijan and Armenia, Belarus, Czech Republic, Georgia, Lithuania, Poland, Ukraine over issues like gas prices, transit lines, export policies and others
CHALLENGES
Energy as a foreign policy tool:
•
Russia has recently been accused of using its natural resources as a policy tool to be wielded against offending states like Georgia, Ukraine, and other states it perceives as hindrances to its power
Was it Really Environmental?
• • •
Analysts speculate that the govt. actions weren’t motivated by environmental concerns Motivated by government desire to give Gazprom a bigger share In 2005, Shell offered 25% of share to state-run company Gazprom for a 50% share in a Gazprom field
FLOW OF PRESENTATION
Introduction Risks of Investing in Russia Investments in Russian O&G Industry
Present FDI Scenario
Future Outlook/Facing the Risks
CHANGING TRENDS
• EU is largest investor in Russia
•
• •
The economy of Russia is the ninth largest economy in the world by nominal value and the sixth largest by purchasing power parity
In 2011 Russia’s gross domestic product grew by 4.2 percent, the world’s third highest growth rate among leading economies Russia FDI grew to $41.2 billion in 2010
TNK-BP
• • • On 1 September 2003, BP and AAR announced the creation of a strategic partnership to jointly hold their oil assets in Russia and Ukraine BP and AAR each own 50% of TNK-BP International Limited, which in turn owns 95% of TNKBP holding, with the other 5% floating freely on public markets In January 2011, BP and Russia's state oil company, Rosneft, formed a strategic partnership on Arctic development
•
•
In March 2011 the Stockholm International Arbitration court blocked the BP-Rosneft deal as breaching TNK–BP earlier contractual arrangements.
AAR's legal action led to the collapse of the BP-Rosneft deal in August 2011, when BP was replaced with ExxonMobil as Rosneft's strategic foreign partner in the Arctic
SAKHALIN 1
• • • • • • Sakhalin Island and immediately offshore, in the Okhotsk Sea, from three fields: Chayvo, Odoptu, and Arkutun-Dagi Exxon-Neftgas Ltd. (ENL) ENLRN-Astra (8.5%) and Sakhalinmorneftegas-Shelf (11.5%); The Japanese consortium SODECO (30%); Indian state-owned oil company ONGC Videsh Ltd. (20%); ExxonMobil (30%) Oil production rates of 250,000 barrels
SAKHALIN 2
• The consortium Sakhalin Energy had a contract to produce gas without a local partner.
•
•
However, in 2005–2006 the consortium was heavily criticized due to environmental issues and the legal proceeding on violation of the Russian environmental regulations were initiated.
Under legal and political pressure, the consortium was forced to sell a majority stake to Gazprom. On 21 December 2006, Gazprom took control over a 50%-plus-one-share stake in the project by signing an agreement with Royal Dutch Shell.
•
Energy analysts believed alleged violations of the environmental regulations were a pretext by the Russian government to pressure Sakhalin Energy to sell a large stake to Gazprom
Gazprom Sakhalin Holdings B.V. (subsidiary of Gazprom) - 50% plus 1 share Shell Sakhalin Holdings B.V. (subsidiary of Royal Dutch Shell) - 27.5% minus 1 share Mitsui Sakhalin Holdings B.V. (subsidiary of Mitsui)- 12.5% Diamond Gas Sakhalin (subsidiary of Mitsubishi) - 10%
• • • •
POLITICAL CONNECTIONS OF GAZPROM
• Worlds largest natural gas company which controls 16% of worlds natural gas reserve
•
• • •
Contributes 64% of total exports from Russia in 2007
Government of Russia holds 50.01% stakes EU is dependent on Gazprom for its gas supplies Was expected to become $ 1 trillion and largest corporation in world by 2010 before financial meltdown
GAZPROM AND RUSSIA
Valdimir Putin Shareholder of Gazprom, Former Prime Minister of Russia, Current President of Russia
Victor Zubkov Current Chairman of Gazprom, Former Prime Minister of Russia
Dmitry Medvedev Former Charmain of Gazprom, Former President of Russia, Current Prime Minister of Russia
doc_763598131.pptx