RUSSIAN CENTRAL GOVT TAKES LOCAL ENERGY

In an email to NewEnergyNews, a source close to this story said the Russian central government’s move had to be seen as part of a pattern of using state authority to take control of the country’s resources.

Russia gains control of Bashkortostan firms
Eric Watkins, August 17, 2007 (Oil and Gas Journal)

WHO
The Moscow Arbitration Court, the Federal Tax Service on behalf of the Russian central government,

You might call it one of the "Lesser Stans" but its resources put it on the map. It is just west of Kazahkstan. (click to enlarge)

WHAT
The court ruled that control of 6 energy companies in theoil-rich Russian province of Bashkortostan (a lesser-known but nevertheless resource-rich “stan”) must be handed over to the central government.

WHEN
The court’s ruling came August 15. It followed a series of decisions in the same vein. The first hint of trouble followed a 2005 explosion at the 130,000 b/d Novo-Ufimsk refinery

WHERE
Bashkortostan is in south-central Russia, between the Volga River and the Ural Mountains, east of Moscow and north of the Caspain Sea.

WHY
- The court ruled in separate lawsuits against Agidel-Invest, Inzer-Invest, Yuryuzan-Invest, and Ural-Invest. They collectively owned oil producer Bashneft (24,000 bpd), refineries Novoil, Ufimsky, Ufaorgsintez, and Ufaneftekhim, and fuel retailer Bashkirnefteproduct. The Bashkortostan government controlled all the companies so that the court rulings essentially constituted a move by the feds against the state. The state will appeal to a higher court.
- The Russian federal government has before used tax and environmental regulations as excuses for disruptions in anticipation of resource takeovers. Both Royal Dutch Shell PLC and BP PLC had to cede control of major projects to state-owned energy entities.
- State-controlled energy giant Rosneft, or a subsidiary,is expected to wind up with control of the Bashkortostan resources.

This is foreign investment in Bashkortostan. Think they found something of value there lately?

QUOTES
Unnamed NewEnergyNews source: “…[T]his is a continuation of the Kremlin’s strong-arm tactics to take over more and more of the country’s oil and gas industry…these takeovers will give the state tremendous economic power – freeing it from the controls normally exercised by a tax-paying populace…”