Der Tagesspiegel (Germany): how Russia wants to get rid of oil dependence

After the historical collapse in March, the situation in the oil market, think again calms down. With the easing of restrictions due to coronavirus is a growing demand in the industry, and with it the price of oil. But this good news for Russian oil industry end. It was at this point a relative stabilization of the Russian top Manager Anatoly Chubais calls: Russia should use the current crisis and, finally, to end the dependence of its economy from oil.

On sale of oil and gas accounts for 20% of Russia’s GDP, about 40% of tax revenues and 60% of exports. Due to falling prices in 2020, Russian oil companies will be missing almost 20 billion euros of profits, and the Russian state — nearly $ 50 billion in tax revenue. These are the forecasts.

Chubais is one of the last liberals from the economy, close to the Kremlin. He leads the state innovation company “RUSNANO”, which aims to develop and promote high technology of the future. In an interview with Russian Forbes magazine, he said about the oil industry, lying in the basis of the Russian economy: “If the horse died, need to get off it”.

This discussion is conducted by the Russian economists for almost two decades — during the presidency of Vladimir Putin. But in reality little has been done. Russian energy Minister Alexander Novak recently said words that seem banal: “Also do not forget that the oil industry must not only extract oil, but also to do the processing.” These words very accurately describe the main problem for a long time oil was so good to earn that key Russian politicians don’t even have to think about other sources of value creation — and especially about fundamental reform and restructuring of the economy.

Rosneft is the largest taxpayer, it is ahead of Gazprom

But even if Chubais’s words are not new, in the current situation they are akin to a Declaration of war Igor Sechin. 59-year-old Sechin twelve years leading the group, which last two years Chairman of the Board of Directors is the former Chancellor of Germany Gerhard Schroeder. Rosneft, the largest Russian oil company and largest taxpayer, ahead of Gazprom.

Sechin is the Central figure in the Russian economy, many in the country it seems ominous. No one, except Putin, is not so much power. And it is this power carefully uses. Due to the gloomy appearance in Russia, they called him Darth Vader. In public space it is practically not present, but pulling the strings behind the scenes. For 25 years, Sechin — a close Putin ally. He was Secretary of the Putin’s St. Petersburg city hall, then moved after him to Moscow, first worked in the presidential administration, and then became Deputy Prime Minister.

Sechin was removed from the path of political opponents

Hour Sechin struck in the summer of 2003. The security Council warned about the dangers of “the coup of the oligarchs.” One — Mikhail Khodorkovsky — were punished, and this should serve as a lesson to everyone else. Whether Sechin had organized the destruction of Yukos? This is a controversial issue. Indisputable, however, consequences: holding at that time, the second place company “Rosneft”, the head of the Board of Directors of which I was Deputy head of the presidential administration Igor Sechin took control of the assets of Yukos.

In may 2012, Sechin finally took the helm of the company as the head of the concern. Almost a year later Rosneft became the world’s largest oil company, presented on the exchange. At the end of 2016, she again hit the headlines in the media because of the incident with the Minister of economy, Alexei Ulyukaev who dared to contradict Sechin, plans to acquire a small but attractive oil company “Bashneft”. Sechin has personally set a trap for the Minister Ulyukayev was detained in the underground Parking lot of the concern, Rosneft, with $ 2 million in cash, which he had received earlier in the office Sechin. Prior to that he had spoken with special services. During the trial, which is partly turned into a farce, the Minister was sentenced to multiyear prison term.

Huge need for investment in the Russian oil industry

This spring, Sechin became a Central figure in the oil war between Russia and Saudi Arabia. Russian Manager wanted the complete abolition of production quotas, but then came the coronavirus, and the demand for oil fell sharply. The result Sechin was forced to surrender. Under the global constraints of production quotas it agreed to a reduction of Russian production by 2.8 million barrels for two months.

At first glance this is not a tragedy. But the former Deputy energy Minister Vladimir Milov warns in his blog that Russia after the expiry of the limitations of the production may be in for a surprise: she wakes up like Sleeping beauty, and the world will never be the same. First, the agreed limitations of the production are insufficient for long-term stabilization of oil prices. Secondly, the Russian oil industry has a huge need for investment, because in many places, the mining is carried out on obsolete technology.

Other experts believe that the demand for oil — if at all — will return to docolomansky level very slowly. In addition, primarily in Western Europe in the coming years for environmental reasons will significantly increase taxes on fossil energy carriers. Sales of Russian oil that could cause special damage, because it has an extremely high sulfur content.