rosneft fuels foreign policy goals
Last Updated : GMT 05:21:58
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Last Updated : GMT 05:21:58
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Rosneft fuels foreign policy goals

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Arab Today, arab today Rosneft fuels foreign policy goals

Rosneft grew massively by acquiring the assets of Yukos oil company
Moscow - Arab Today

Whether investing in China, Venezuela or Iraq, Russian oil giant Rosneft closely follows Moscow's geopolitical interests as the Kremlin-controlled company seeks to expand its nation's influence, at times in unstable countries.

Headed by Vladimir Putin's ally Igor Sechin, Rosneft grew massively by acquiring the assets of Yukos oil company, whose founder Mikhail Khodorkovsky spent a decade in jail on charges widely seen as punishment for his political ambitions.

Rosneft has since grown into a global oil giant with an output of over 5 million barrels per day and a net worth of almost $50 billion.

All the while, Rosneft has followed Russia's political course, distancing itself from the West and turning instead towards large developing countries.

"Sechin is not just an economic leader," said Nikolai Petrov, a professor at Moscow's Higher School of Economics.

Sechin wants to "demonstrate that Rosneft is important and necessary not only as one of the pillars of Russia's economy but also as a powerful tool for foreign policy," Petrov said.

Although it floated on the London Stock Exchange in 2006 and has in the past partnered with Western giants such as US ExxonMobil and Norwegian Statoil, Rosneft has more recently attracted attention by striking a deal to sell oil to China, purchasing Indian refiner Essar Oil and attracting investment from Qatar.

Hit by the Western sanctions imposed on Moscow in 2014 for Russia's role in the Ukraine crisis, Rosneft does not hesitate to do business with turbulent countries where other foreign investors are wary.

- Sanctions effect -

This week Rosneft revealed it has paid the authorities in Iraqi Kurdistan an advance of $1.3 billion as part of production sharing deals to tap the vast resources in the region.

The move angered Baghdad which denounced the deal as a "blatant interference in Iraqi interior affairs" as Iraqi authorities are battling a crisis in the region sparked by a September 25 referendum on Kurdish independence.

"Just as (gas group) Gazprom exercises a real role in foreign policy towards Europe and China, Rosneft is responsible for other parts of foreign policy such as Latin America," said Petrov.

Rosneft has found itself at the centre of the Venezuela crisis, where the local state-owned oil company PDVSA owes its Russian counterpart around $6 billion.

Officially, the loan was meant for oil delivery contracts to last until 2019 but many experts see it as a form of disguised financial support for Moscow ally Caracas, which has just signed a deal with Russia on restructuring debt taken out in 2011.

Rosneft has also signed deals with Libyan and Iranian state companies this year over investments and joint projects in the two countries.

These contracts allow Russia to reinforce its links -- and influence -- in countries ostracised by the United States, while Moscow's relations with Washington are increasingly reminiscent of the Cold War.

However, according to Alexei Gromov, director of Moscow's Institute for Energy and Finance, Rosneft is primarily carrying out "an aggressive expansionist policy to acquire assets in Russia and abroad."

"Around the world it is fairly difficult to find very interesting assets at an affordable price," said Gromov, adding that Rosneft was invited to Kurdistan and offered "attractive conditions".

"One can't forget that Rosneft is under Western sanctions, so the company pays special attention to the markets of countries that did not recognise the sanctions," he added.

"Rosneft engaged in Venezuela when the country had huge potential oil resources. Who knew then that the prices would collapse in 2014 and that a political catastrophe would begin?"

While announcing its third-quarter results on Tuesday -- with its net profit almost doubled year-on-year -- Rosneft said more advances to PDVSA "are not planned".

Source:AFP

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