Streetwise Professor

July 11, 2019

Putin Stands Aloof While Rosneft and Transneft Duke It Out

Filed under: Economics,Energy,Politics,Russia — cpirrong @ 6:50 pm

Totalitarian and authoritarian regimes are noted for their vicious internecine battles between the lords of various economic fiefdoms: Nazi Germany presents a classic example (and perhaps a good thing too, because these battles crippled German war industry). Not-quite-totalitarian Russia is seeing such a battle today, over the fallout from the Druzhba pipeline fiasco. Pipeline operator Transneft and oil producer and refiner Rosneft are at it hammer and tong over the issue:

Russian state-owned pipeline monopoly Transneft launched a broadside at Rosneft on Monday, publicly criticising the oil producer for dragging its feet over oil quality controls and making unsubstantiated damages claims.
Transneft said that Rosneft had been unwilling to help resolve a contaminated oil crisis in the Russian Druzhba export pipeline which began in late April and that the oil producer was seeking compensation from it without any grounds.
Rosneft did not immediately responded to a request for comment.

For his part, Putin is steering clear:

The dispute between Rosneft and Transneft (TRNF_p.MM) is not a matter for Russian President Vladimir Putin to intervene in because it is a corporate matter, Kremlin spokesman Dmitry Peskov said on Wednesday.

As if Putin never got involved in corporate matters before. Hell, this is supposed to be his job. As I have pointed out for well over a decade, Putin’s primary function in the Russian “natural state” has been to be the balancer, the adjudicator of conflicts within the Russian economic elite, and the distributor of rents among them.

So why is he standing aloof? His power has eroded to the point that he can’t dictate or even negotiate a settlement? Or does he actually quite like economic titans bashing out each other’s brains, thereby distracting them from scheming against him?

I’m guessing the latter. After some more weeks or even months of Tokarev and Sechin bashing one another, he’ll swoop in and graciously broker a solution.

An aside on Transneft’s criticism of Rosneft dragging its feet on “oil quality controls.” To me that is an implicit accusation that the massive contamination wasn’t caused by a handful of mopes currently enjoying the hospitality of a Russian prison, but was the result of something Rosneft did (or didn’t do). Given the volumes involved, that’s quite plausible.

And if true, it would make Sechin’s demand for compensation, and his praise for the operators of Rosneft’s German refinery, truly awesome examples of chutzpah. But we all know that chutzpah is one thing Sechin is expert at. Or should I say the one thing?

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5 Comments »

  1. “managed democracy”?

    Comment by elmer — July 12, 2019 @ 11:54 am

  2. @elmer-Mismanaged Non-democracy.

    Comment by cpirrong — July 12, 2019 @ 5:16 pm

  3. The ‘warring kingdoms’ model of personnel management. Allows one to get on with more important matters in safety while the subordinates duke it out.

    No news about ‘Rogozin the Ridiculous’? I’m missing the updates.

    Comment by Global Super-Regulator on Lunch Break — July 15, 2019 @ 1:36 am

  4. @SWP…There is a third possibility to why Putin is standing aloof. Maybe he is scratching his head about some answer, too. Not every problem has an Alka-Seltzer instant-relief solution. So maybe Vaya doesn’t want to look stupid with an unsuccessful/uninformed suggestion and is waiting to see if some solution emerges.

    Comment by Richard Whitney — July 15, 2019 @ 2:42 pm

  5. @GSRoLB–I think Putin has him locked up in a Kremlin closet. The last sighting was giving a rather embarrassed-looking American astronaut (whose wife teaches at UH, BTW) a bear hug after the American and his Russian compatriots’ rocket failed on launch.

    Yes, I think Putin probably figures it’s better that they are engaged in fighting one another rather than conspiring against him.

    Comment by cpirrong — July 16, 2019 @ 9:02 am

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