Putin plan to shut out US oil giants

A final decision on awarding the contracts – which involves extracting and transporting gas from Shtokman in partnership with Gazprom, the Russian state-controlled company – was also originally expected before the G8 summit but has been postponed until next month at the earliest.

As well as the US and Norwegian companies, Total of France is also on the shortlist to develop the 3.7 trillion cubic metre gas field, which is located in the Barents Sea, near the Arctic Circle.

Igor Shuvalov, a Putin aide, warned in April that the US firms’ chances of participating in the undersea drilling project were tied to US support for Russia’s WTO bid, although this has since been denied by the Kremlin.

Last week, however, Putin singled out the Norwegian bidders for praise when asked by reporters about energy deposits in the Barents Sea.

‘You have probably heard that we are holding talks with several countries on the development of different fields, but companies from Norway are among the first on this list,’ he said.

He added: ‘They don’t go around with their noses in the air. They work objectively, very professionally.’ Viktor Khristenko, the Russian energy minister, also praised the Norwegian firms’ record on protecting the environment last week.

Analysts have tipped the Kremlin to pick the Norwegian contractors following the recent resolution of a Barents Sea territorial dispute between Oslo and Moscow.

But the Shtokman project is also important to Russia’s long-term relations with the US, since most gas from the field is to be shipped to north America in the form of liquefied natural gas. Participation by Chevron or ConocoPhillips could help ease access to the US market.

Russia has been very reluctant to allow foreign oil groups access to its energy reserves other than as junior partners on joint ventures with Gazprom. Russia supplies 25 per cent of the European Union’s gas but has also resisted EU demands that it loosen Gazprom’s control over the country’s pipeline network.

A dispute over gas prices earlier this year between Russia and Ukraine led to temporary disruptions in the flow of gas to western Europe and prompted Dick Cheney, the US vice president, to accuse Moscow of using energy as a tool of ‘intimidation and blackmail’.

But these diplomatic ructions have not extinguished the appetite of western investors for Russian energy stocks. Last week the oil group Rosneft successfully floated in London and Moscow with a $10.4bn placing.

Despite its size, the IPO represents only a small fraction of Rosneft’s total equity, and the company remains majority-controlled by the Russian state.


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