Foreign Investment and National Interests in the Russian Oil and Gas Industry

Abstract

This article examines the political economy of foreign direct investment in the Russian oil and gas industry in order to explain the limited role of foreign capital in this sector. There are three forms of foreign direct investment in the Russian oil and gas industry: (1) joint ventures, (2) investment within the framework of a production sharing agreement (PSA) and (3) foreign equity investment. The development of these three forms of foreign direct investment is analysed with special reference to the interests of the parties involved, before a conclusion on the political factors determining the conditions for foreign investment is made.

The Russian oil industry between public and private governance: obstacles to international oil companies’ investment strategies

“…The first joint ventures were created in 1989, after the 1986 law signed by Mikhail Gorbache¨v laid down the legal basis for their creation. By the beginning of 2000, there were about 30 such ventures (Heinrich et al, 2002). The agreement signed in February 2003 between TNK and BP is greater than all the other experiments because it covers all activities and deposits held by the Russian company.…”

Property rules: State fragmentation, industry heterogeneity and property rights in the Russian oil industry, 1992—2006

“…Consequently, equity investment was the least successful form of foreign investment in the Russian oil industry. In contrast, joint ventures were supported by tax breaks and export quotas and flourished, with the number of oil producing joint ventures reaching 42 in 1998 (Heinrich et al, 2002). The advent of production-sharing agreements (PSA) further increased opportunities for foreign participation.…”

A Critical Review of Existing Approaches to Siberia: Relevance to Siberian Economic Development

“…The numerous studies on Russia's oil and gas industry include sectoral overviews (see Astrov 2003), studies on the state of the gas industry (Biggar 2002 andWein 1996a, 19966 specifically on Western Siberia) and the oil industry (Considine and Kerr 2002;Sagers 2001), gas sector policy (Locatelli 2002), oil sector policy (Lane 1999), the development of large, internationally important companies in the field (Liutho 2001), and sub-regional studies focusing on Western Siberia, Eastern Siberia, or the Far East (Sagers 1995 ). Reviewed literature include works on the geo-economic importance of Russian energy (Morse and Richard 2002) and all issues related to foreign legal (Shulga 2001) and political (Heinrich et al 2002) aspects.…”