Posted by: russiaoilandgas | July 16, 2007

Yeltsin’s Shadow Looms Large over Russian Oil and Gas Industry

Yeltsin Russia Oil Gas Politics The recent death of former Russian president Boris Yeltsin has created a glut of analysis and appraisal of his tenure. Of course, his impact on Russia’s transition from communist USSR to capitalist, democratic Russia has dominated most of the articles found in the press across the world. But what effect did his tenure have on the Russian oil and gas industry? We’ve found this excellent article by Oil and Gas Eurasia’s Pat Davis Szymczak.

The Yeltsin Epoch – An Expat’s Reflections from the Oil&Gas Side of Things

As one US network coro told me then: “The editors in New York don’t care about Russia, they’ll air a story only if it’s on the Mir Space Station or if Yeltsin dies.” Another question editors back home asked often was “Do you think they’ll go Communist again?”

That was a decade ago and this week, on Monday, April 22, 2007, Boris Yeltsin did meet his God. I’m still a journalist, but I run an oil and gas technology magazine, so why write a story? The death of a head of state out of office for eight years is for mass media, not technology press. But then I started to reflect on my own 1990s love affair with Russia.

When Boris Yeltsin in August of 1991 stared down the coup plotters from atop a tank outside the Russian “White House” (the old Soviet parliament building), none of the Russian oil and gas companies we do business with today existed. There was no LUKoil for example, only a Langapas Production Association running that field, and an Urai Production Association and a Kogalym Production Association. There were hundreds of field by field production business units with all field services under one roof the Soviet Ministry of the Oil Industry. No Gazprom either, that was the Soviet Ministry of the Gas Industry.

When Yeltsin climbed onto that tank, I watched him on television while at a backyard barbeque in Chicago’s Ukrainian neighborhood; Ukrainian Diaspora and one Chicago Tribune reporter with a Polish surname, enjoying a beer and a burger in late summer while we chanted “Yeltsin, Yeltsin, Yeltsin”. The emotions of those times were electric.

Two years later, I was in Moscow editing English texts for Russian Petroleum Investor. RPI was the world’s first publication from Russia, in English, that tried to demystify post Soviet Russia for the global oil and gas industry. Believe it or not, even university grads in Russian studies, like me, hadn’t been taught about Russia’s dominance in oil and gas. The country with the world’s largest natural gas reserves and second largest oil reserves outside of OPEC was entering the world of global commerce and non-Russians knew Siberia as just one big GULAG camp!

As for Yeltsin’s legacy, I don’t believe it is as black and white as CNN portrayed it last night. Many young people in Russia who enjoy the freedom to travel and build careers in commercial companies resent the slide Russia took in international prestige in the 1990s under Yeltsin. My own corporate attorney, an accomplished young English speaking Russian guy, told me, when I asked if he’d heard the news, “So what? He was a cheater.” Maybe so, but please introduce me to the leadership of any country in the world which doesn’t have its dark side.
Since Yeltsin got on board that tank, a dozen vertically integrated companies, some as big as any of their peers in the world, sprung to life. True, the emerging class of oligarchs behind those early companies were well connected opportunists. That’s the way the world works, and in this, Russia is not unique. The chaos of the Yeltsin years served up an “omelet” which could not be undone and put back into the form of the old system. Even with the emphasis today on creating state oil companies that would own the best reserves, there are still world-class integrated majors in Russia with private ownership. Take LUKOIL for example. And a new class of small and medium size business is taking root in the services and supply industry that pre-Yeltsin was also controlled by a single ministry.

For the orinignal story click here. ( )


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