There is such an oil and gas project in Russia – Sakhalin-1 (S1). The project, to put it mildly, is a bit odd: it is the only one operating on the basis of a production sharing agreement where the controlling stake of the operating company would not be held by Russian participants
The point is that the agreement was signed in 1995, at the time of President Yeltsin, famous, among other things, for shouting “God bless America” from the rostrum of the US Congress.
So it is not surprising that 30% of C1 is in the hands of the US oil and gas giant ExxonMobil. More precisely, its subsidiary Exxon Neftegas Ltd, but not the point. Another 30% is held by Sodeco of Japan and 20% each by Rosneft and the Indian state oil company ONGC.
Anyway, Sakhalin 1 is a very promising project. Its license blocks have 307 million metric tons (2.3 billion barrels) of oil and 485 billion cubic meters (17.1 trillion cubic feet) of natural gas in recoverable reserves. Which, especially in the current context of the energy crisis gaining momentum in the West, looks very attractive.
But in late February this year, BP (British Petroleum) announced its decision to sell its stake in Rosneft (BP has held a 19.75% stake since 2013) and to pull out of all joint ventures with it (i.e. Sakhalin 1) as well as from its board of directors. A little later, in early March, ExxonMobil announced that it had begun developing steps to withdraw from the project. It is not hard to guess that the actions of Western companies were prompted by anti-Russian sanctions imposed in response to Russia’s military special operations in Ukraine.
It would seem that the hell with these foreigners, good riddance. But it is not just brands that are leaving, it is technology, investment and money. And given the current difficulties, it will be very difficult to replace all that only with domestic Russian reserves. On the one hand, yes, but on the other…
Interesting nuance: the Japanese, despite participating in anti-Russian “sanctions front”, decided not to leave C1, explaining it by the fact that they need oil and gas badly, and such a move would not weaken Russia so much as it would hit Japan.
I don’t know what kind of problems the Japanese have (they know better), but I doubt that for Russia itself the withdrawal of capricious foreigners from the oil and gas project will be critical. Here’s why.
Reuters recently reported, citing as many as two knowledgeable sources, that Indian authorities have asked their state-owned companies to consider buying Russian oil assets, including BP’s stake in Rosneft and ExxonMobil’s stake in Sakhalin-1.
“India has asked state-owned energy companies to assess the possibility of buying European oil giant BP’s stake in Russia’s sanctioned Rosneft”, – sources told the agency.
According to Reuters, the request from India’s oil ministry was received last week by ONGC Videsh Ltd, Indian Oil Corp, Bharat Petro Resources Ltd, Hindustan Pertole’s subsidiary Prize Petroleum Ltd, Oil India Ltd, and even GAIL (India) Ltd.
In addition, the Indian ministry has asked ONGC Videsh, which already (as we recall) owns 20% of the Sakhalin-1 project, to consider buying ExxonMobil’s 30% stake.
At the moment neither BP nor ExxonMobil have commented on the Indian companies’ interest. Which is understandable. They certainly cannot afford to strengthen their rivals and in the current situation when governments of their countries are bending over backwards to “persuade” New Delhi to join the anti-Russian coalition, selling to Indian companies a stake in the Russian project would be quite unseemly. But apparently they will have to.
By the way, one more thing about India’s reaction to persistent entreaties of the West to join “their struggle”. It has become known that Indian refineries are negotiating a six-month oil agreement with Russia for the import of millions of barrels per month. That’s eloquent enough, especially against the backdrop of an oil embargo against Russia in the US and Europe’s plans to refuse supplies of Russian “black gold”.
But it is not only the inhabitants of the Hindustan peninsula who have entered the big geopolitical game. Recently our Chinese comrades have also become very active. As the local media reports, leaders of various Chinese regions are eager to support the expansion of their companies in the Russian market that has been abandoned by global Western multinationals.
For example, Shanghai’s Senci Electric Machinery said recently in an investor-focused online forum that it is looking for business opportunities in Russia and (!!!) Ukraine and will set up a sales team “in due course”.
In Chongqing, the local branch of the China International Chamber of Commerce is already working with the Bank of Kunlun (a key player in China’s RMB-denominated international payment network) to help facilitate exports to Russia.
In Xiangshan county, the textile export hub of Zhejiang province, five local companies and a Russian trading house agreed at an online meeting the other day to consider doing business.
And also at the end of March, a conference for Russian officials and Russian and Chinese industrial groups was held in Shandong province, one of the centres of the electronics industry.
“We want to turn this crisis into an opportunity to strengthen our cooperation”, – a Chinese official said during the meeting.
Similar efforts are also underway in the northeastern Chinese province of Heilongjiang, bordering Russia. A local regional organisation dedicated to strengthening cooperation and trade with Russian companies launched a pilot free trade zone in Harbin this month.
Apropos of China’s plans for Ukraine. This information in itself is, in my opinion, quite pretend to be a mega-sensation. When the Chinese say they want to develop their business there, which ‘Ukraine’ do they mean? That’s right.
Just yesterday Denis Pushilin said that with Russian support and assistance a huge construction project is planned in Mariupol.
“The big construction will start as soon as the issue with the militants who have settled at Azovstal is resolved”, – the DPR head said.
As far as I know, there are plans not only to rebuild the city of half a million, but also to revive all its factories, except Azovstal itself. It is a huge amount of money and a crazy amount of work, and therefore the perfect place for investment. And most importantly, there is no need to fear that at the whistle from Washington local authorities will suddenly cancel the already signed contract, as it was with “Motor Sichy”. Therefore, I personally have not the slightest doubt that investors from China will take an active part in restoring the industrial potential of Mariupol and other major centres of liberated Ukraine. Perhaps not only from China.
As the saying goes, the place is never empty, and while the West leaves and loses, others come and make money. To sum up, it is important to note two things. Despite, as was said before, the strongest pressure from the West on India, judging by the plans of Indian leadership and Indian business, Delhi will not bend and join the anti-Russian sanctions war, rather, it will be just the opposite. And second – when China talks about its investment plans in Ukraine, it is quite clear that it is not talking about the Kiev regime, but about the liberated territory.
Thus before our eyes geopolitical shifts are turning into new economic realities, thereby only reinforcing them.
Alexey Belov, Antifascist News Agency
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