Kremlin extends grip on oil

The chief of the private oil company Russneft is on the run in the wake of an international arrest warrant issued by Russia.

Mikhail Gutseriyev, a Russian oil billionaire who offended the Kremlin, is on the run, claiming he is the victim of political persecution.

His private company Russneft, once the country's seventh-largest petroleum firm, has been hobbled by back tax charges and seized by a court.

The tribulations of Mr. Gutseriyev, who has reportedly fled to London ahead of an international arrest warrant, bear more than a passing resemblance to the fate of Mikhail Khodorkovsky, whose arrest three years ago led to the effective renationalization of his Yukos oil empire.

Since then, the state has moved from a tiny minority stake to direct control of 44 percent of Russia's oil production, according to a recent survey by Russia's Alpha Bank. Another wave of state takeovers is in the wind, experts say, and Russneft has been targeted for incorporation into a new mega-oil firm to be run by the Kremlin.

But confusion surrounds the disposition of Russneft, which has reportedly been purchased by aluminum magnate Oleg Deripaska, a close ally of President Vladimir Putin, for some $6 billion. Last week, a Moscow court reaffirmed its seizure of the company, suggesting another contender for control may be waiting in the wings. Experts say that Mr. Putin's intention to step down early next year may have brought a Kremlin power struggle into the open.

"Before, there was a precarious balance, but now it's a complete mess in the Kremlin," says Mikhail Krutikhin, an expert with Russian Energy, a Moscow consulting firm. "Putin seems to be a lame duck, and factions seem to be breaking away and acting on their own."

Gutseriyev tried to buy Yukos assets

Gutseriyev, whose Russneft was a small but fast-growing player that produced about 300,000 barrels daily, reportedly angered the Kremlin earlier this year by attempting to purchase Yukos assets that had been earmarked for state firms. In May, he was charged with "illegal business activity," and Russneft was saddled by Russia's tax police with $800 million in back tax charges.

Experts say Gutseriyev, an ethnic Ingush, may have also displeased authorities by supporting politicians opposed to ex-KGB general Murat Zyazikov, the Kremlin appointee who leads the troubled Caucasus republic of Ingushetia. In late August, Gutseriyev's 21-year-old son, Chinghiz, was killed in a mysterious car crash and the tycoon was last seen at the boy's funeral in Baku, Azerbaijan. Last week, a Moscow court issued an international arrest warrant, saying Gutseriyev had violated a pledge not to leave Russia.

"Gutseriyev showed he would not be part of the system, and what happened to him is part of a larger process," says Olga Kyrshtanovskaya, head of Elite Studies at the official Russian Institute of Sociology. "People who are intractable, or do not play by the rules, invite a nervous reaction from the authorities. With elections coming, the atmosphere is even more strained."

Mr. Khodorkovsky is currently serving an eight-year prison sentence in a Siberian labor camp, and most of Yukos's assets have been taken over by Rosneft. His lawyer, Yury Schmidt, says the Gutseriyev case contains elements of déjà vu. "Khodorkovsky's fate frightened the business community and kept them on their knees for several years," he says. "But fear passes with time, and the example has to be renewed. [Gutseriyev] serves to remind people that anyone can be next."

Before disappearing about a month ago, Gutseriyev wrote an open letter to his employees, which he subsequently withdrew, complaining that the company had been subjected to "unprecedented hounding" after he refused to leave the oil business "on good terms." Therefore, he said, "I am handing control to a new owner whose appearance, I am sure, will ensure that all Russneft's problems will be resolved in time."

Mr. Deripaska has stepped forward to claim Russneft, last week asking the state Antimonopoly Commission to verify his purchase of the company.

But it is not clear whether Moscow's Lefortovsky District Court, which has frozen Russneft's assets against tax claims, will hand them over. Experts are also unsure about the intentions of Deripaska, Russia's second-richest man, who recently told an interviewer that "I do not separate myself from the state," and added that he would gladly hand over his property to the Kremlin if asked to.

"Deripaska may pass on Russneft to a state-owned entity, such as Rosneft," Mr. Krutikhin says.

In the past year, the state-owned natural-gas monopoly Gazprom has forced international firms such as Shell and BP to surrender their stakes in Russian gas fields, and many experts believe the Kremlin's appetite for hydrocarbon assets is still strong.

Kremlin wants national conglomerate

"The Kremlin wants to create a national champion in oil that could compete on a global scale," says Oleg Maximov, an analyst with Troika Dialogue, a Moscow-based investment firm. "Since the oil prices started rising, the state has moved to increase its participation in this sector and to give special breaks to state-owned companies."

The idea, he says, is to build the new conglomerate by merging the state-owned Rosneft with the Volga regional firm Bashneft, which has recently been renationalized, plus private companies that might be purchased.

"There are several candidates, including Surgutneftegaz and TNK-BP, whose owners might be forced to sell, or choose to sell," says Mr. Maximov. "These are very big companies, each producing over 1 million barrels of oil daily."

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Key steps in growing Kremlin control of oil, gas firms


October – Mikhail Khodorkovsky, chief of oil company Yukos, is arrested on tax evasion and fraud charges.


January – Russia cancels ExxonMobil's rights to develop Sakhalin III, a gas field in the Sakhalin Islands.

December – State-owned Rosneft acquires assets of Yukos, Russia's largest private oil firm until it collapsed after Khodorkovsky's arrest. He claimed he was targeted for supporting the opposition.


September – State-owned oil and gas firm Gazprom acquires controlling stake in Sibneft for $13 billion. Sibneft was privatized in the late 1990s.

September – Gazprom gets exclusive rights to export natural gas.

December – The state gets controlling stake in Gazprom.


September – The government cancels Paris-based oil company Total SA's license to extract oil in the Arctic.

December – Gazprom acquires controlling stake in the $ 22 billion Sakhalin II project from Royal Dutch Shell.

December – Russia refuses to ratify the European Union energy charter since it requires third-party access to pipelines.


June – TNK-BP, a BP joint venture, agrees to sell its 62.8 percent stake in the Kovyta gas field in Siberia to Gazprom after authorities threatened to revoke its license.

August – A Moscow court gives Kremlin control of six oil companies, including Bashneft, Russia's 10th-largest oil producer.

Source: News reports; industry newsletters

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