Streetwise Professor

March 2, 2011

Yet Another Surprise, Tim!

Filed under: Economics,Energy,Politics,Russia — The Professor @ 3:58 pm

The estimable and experienced (not to say jaded!) Tim Newman at White Sun of the Desert feigns surprise at some revelations in a Transparency Watch-Revenue Watch Institute study of transparency among energy companies.  The Nigerian National Petroleum Company (motto: “We’re here to make Russia look good!”) earned a Bluto Blutarski GPA, which is to say in the immortal words of Dean Wormer, “ZERO POINT ZERO.”

Gazprom is in the Flounder range: “0.2… Fat, drunk and stupid is no way to go through life, son.”  Gazprom scored a zero on anti-corruption reporting.  To echo Tim:  I’m shocked!  Shocked!

Speaking of Gazprom and unsurprising developments, it picked up the Kovykta gas field for a song:

“They have got it virtually for free,” concluded one analyst after state-owned Gazprom triumphed with a $773m (£474m) bid for the giant field that is thought to contain enough gas to supply the world demand for eight months.

It certainly looks likes a good deal, at first glance, with Gazprom paying the equivalent of 6 cents per barrel of oil equivalent for the rights to extract the field’s estimated two trillion cubic metres of reserves.

BP’s shareholders should know the Kovykta gas field well: until recently, BP owned a 50pc stake in it through its TNK-BP joint venture. It was once one of the joint venture’s most promising prospects. One of the largest undeveloped sites in the world, positioned close to the growing Chinese market, City analysts put a $2bn price tag on the field.

Technically, Rosneft was in the running.   The results suggest that this was mere window dressing intended to give the charade a simulacrum of competitiveness.  There wasn’t arms-length bargaining in this deal.  Strong arming is more like it.

I especially like this part:

Gazprom initially claimed it wasn’t interested in bidding. “From the point of view of long-term balance we don’t see how gas from Kovykta can be used,” claimed executive Viktor Timoshilov just a few months ago. You can only assume that the Russian giant has since figured it out.

BP presumably believes that it has immunized itself against a repeat of this fiasco by dealing with state-owned Rosneft and Igor Sechin, rather than a group of mere oligarchs.  Maybe so, but worms have a way of turning in Russia.  Or, to mix metaphors, one’s roof can protect you today, and collapse on you tomorrow.

This is especially true in a country where with respect to corruption and investor protection you can look down on Nigeria.  Maybe.

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