Russian Energy and Politics

1
Russian Energy and Politics

• Vladimir MilovEnergy Committee of
  theAssociation of the European Businesses in
  theRussian Federation
• Moscow, January 25th, 2008

2
Oil production growth brought down to zero
Crude oil output growth as compared to 2006,
3
Champions of declining crude oil output
Leaders in crude oil output decline, 2007
compared to 2006,
4
Gas Gazproms production back to 2003 level
Gas production by Gazprom, bcm/year
5
Yuzhno-Russkoye gas field launched. What is left?
Potential of new gas output in the current gas
production area, that would be relatively easy to
launch in the coming years, bcm/year
Thats it?
Source presentation by Gazproms deputy CEO
A.Ananenkov, Moscow, June 14th, 2007
6
Share of the state in crude oil output
Crude oil output in Russia by state-affiliated
and private companies,
7
Share of the state in refining capacity ownership
Refining capacity ownership in Russia by
state-affiliated and private companies,
8
Politics Russia is entering the period of great
uncertainty

• Rigged December Duma elections undermine actual
  illegitimacy of the Parliament
• Destruction of independent parliament and courts
  leave Russia without a functioning Constitution
• New President to be elected in March, Dmitri
  Medvedev, would lack legitimacy, too
• Putins move to the Prime Minister post creates a
  real possibility of conflictive power diarchy in
  Russia
• Currently, all this is hidden behind high popular
  approval ratings. What if they fall?

9
Dmitri Medvedev a liberal?

• Coordinated the Russian intervention into the
  Presidential elections in Ukraine in 2004
• His protégés, N.Vinnichenko and A.Ivanov, had
  legally and organizationally backed the Yukos
  asset expropriation in 2004-2007
• As a head of the Kremlin Administration in
  2003-2005, Medvedev had launched an unprecedented
  legislation reform banning democratic
  institutions freedom of meetings and
  demonstrations, freedom for political parties
• Governors elections and direct elections of Duma
  deputies were abolished during that period
• As a Vice Prime Minister, Medvedev had replaced
  failed systemic social reforms with non-systemic
  money injections into social sphere (national
  projects)
• What is so liberal about Mr.Medvedev?

10
What if a global recession begins?

• Russian corporations will face troubles borrowing
  new loans in the West
• Liquidity problem will erupt
• Capital will exit the country
• At the same time, inflation will continue to
  spike
• Growth of industrial output and economic growth
  may substantially slow down
• Oil prices may drop, creating problems for budget
  system and current accounts balance
• Will the current Russian authorities be able to
  effectively manage this situation?