Russia » Economics

Best policy for Russian oil industry

Dear Editor,
Government and State Duma should change the policy of liquidating all assets "not connected with the fulfillment of state functions" by 2008.  Russian Oil Companies should be both government and privately owned.  With the optimal distribution of 75% private, and 25% government owned.

If government owns a controlling stake it would undermine our national interests.  OPEC has tried to put a lid on some of our oil export, but with so many non-government companies with different centers of coordination it's efforts were futile.  Having the government owning controlling stake would place our export quotas on a table as bargaining chips, because now the Saudis would know we could give into their demands.  Their pressure should not be underestimated.  Saudis went all out in their efforts to drop the oil price when Venezuelans crossed them, and the price indeed collapsed.  Now the Venezuelans are in line with Saudi demands.  Controlling stake in this situation brings us that much closer to a price war with the Arabs.

At the same time it is in the government's interests to have a minority stake in these companies.  These are national resources, and the nation should be able to benefit from them.  It is not enough to tax them.  Dividend on government shares does go to our national reserves, or our stabilization fund that recently surpassed 7 billion US dollars.  But there is more to government shares.

They allow the government to overlook, and perceive what's going on in a company.  This is vital to protect the interests of the nation as a participant. 

That is why Lukoil, the largest Russian oil company that is also owned both privately, and by government has no unpaid taxes while Yukos, the second largest Russian oil company that is owned privately has avoided paying it's share for 4 to 5 years!

Iraq's oil production even with all the sabotage and broken pipelines has stayed between 928,570 to 1.8 million barrels a day, and it's reserves can support much much more.  China's Great Water-Dam, and the nuclear power-plants sprouting through Asia reinforce the stated optimal distribution for our pursuit of opportunity cost.

D Slavovich Ratz
Russian Investor
Sacramento, California, USA

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