The Russian State and Russian Energy Companies, 1992–2018 by Ingerid M. Opdahl

Author:Ingerid M. Opdahl [Opdahl, Ingerid M.]
Language: eng
Format: epub
ISBN: 9780815354055
Barnesnoble:
Publisher: Taylor & Francis
Published: 2020-06-30T00:00:00+00:00

The new stability: Loyalty and limits for private companies

The state now increased its capacity in the oil sector, but the government was impatient with oil companies’ efforts to minimise tax payments. In 2003, Putin and the government clashed with Mikhail Khodorkovskii of Yukos on the subject of oil sector regulation. The case included tax optimisation, especially through domestic offshore havens, but also the extent to which the state should influence production methods. Yukos’s attempts to develop export options with China but without Transneft, and its lobbying of the Duma, especially with regard to taxation, were other issues of contention (Gustafson, 2012, pp.294–295). When Khodorkovskii was arrested on tax claims in October, the campaign against Yukos, underway for some time, moved up a gear into expropriation. The heads of other companies kept quiet at this point. In Thane Gustafson’s analysis, Alekperov’s previous alignment with some of Khodorkovskii’s views on industry development disappeared at the first public hint of a confrontation with Putin (Gustafson, 2012, pp.335–336). As discussed here, Alekperov had long seen it as imperative to maintain good working relations with the state. Because of that, he quickly grasped the implications and potential damage to other companies of the Yukos affair. A few weeks ahead of Khodorkovsky’s arrest, Alekperov emphasised that any challenge to the current order would have to come from somewhere else (Butrin, 2003).

In the period from October 2003 to the end of 2005, Yukos’s production company, Yuganskneftegaz, was sold off and eventually acquired by Rosneft. In the same period, the major private oil company Sibneft came under Gazprom’s control. The state undertook an extensive control mission of oil industry operations in West Siberia (Gustafson, 2012, pp.308–309). The private oil sector seemed under threat of renationalisation. Rosneft and Gazprom acquired several large oil companies in the years that followed. As a result, the playing field was tilted in favour of the state (Bradshaw, 2009, p.5).

Lukoil complied with the new formal and informal requirements, and remained a successful company. Even more than before, Alekperov was prone to describing Lukoil as “state-minded”. There was no difference, in principle, he insisted, between the Russian oil companies. They were all Russian (e.g. in Tutushkin, 2008). The subject often came up in the context of licensing on the continental shelf, suspended in 2005, and access to new offshore fields. This was of particular interest to Lukoil, because it was the next frontier of its development and important to its strategy.

The Yukos case illustrated the importance of political loyalty and adherence to informal convention to avoid being targeted for selective rule enforcement. In exemplifying the selective application of formal rules, the Yukos affair reinforced a system of personal privileges. Alekperov learnt this lesson. Perhaps most importantly, once he understood that Putin was promoting state-owned Rosneft, still a company of lesser significance than his own, he settled all ongoing disputes with that company (Gustafson, 2012, pp.334–335). Lukoil quickly eliminated its legal tax optimisation schemes like those employed by Yukos (Skorobogat’ko, 2004). In December 2004, when the Kremlin asked the oil companies to cut petrol prices, Lukoil was the first to be asked.

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