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August 24, 2004 by AK

ConocoPhillips deeper in Russia?

I’ve been wondering whether the Russian courts’ attack on YUKOS will end in the bulk of its assets acquired by a) the government; b) an oil company whose owners are loyal to Putin (Vagit Alekperov of LUKOIL or Vladimir Bogdanov of Surgutneftegaz); c) a Western oil major. Big Oil likes autocrats better than oligarchs: BP approached the Soviet government in the 1980s with no success, got back in the 1990s, bought a stake in a privatized Russian oil company, saw its prize assets stolen (via bankruptcy proceedings) by a Russian rival, the oligarch-coltrolled TNK (remember Victor Vekselberg, a connoiseur of Fabergé eggs?), and–oh the irony–set up a join venture with the said TNK. Quite a tortuous road.

How about a top-down approach? Conoco Phillips, which already has a presence in Timan Pechora, is trying that.

Speaking with Mulva [Conoco Phillips CEO] in front of reporters, Putin called for more cooperation between Russian and American companies, “especially in such strategic areas as energy.” Mulva would get significant support, Putin said. “You can count not only on me. I’m sure that from the Russian and American sides, support will be significant.”

Putin flew to Krasnodar to meet Mulva and LUKOIL CEO/co-owner Alekperov and bless ConocoPhillips’ plan to buy about 8% of LUKOIL still owned by Moscow.

In the mid-1990s, ARCO (Atlantic Richfield, a US oil co.) bought 8% in LUKOIL but, after Amoco acquired ARCO and merged with BP, the latter sold off the stake. (No wonder: they say Sir John Browne once got in a fistfight with Alekperov!)


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