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International Issues
  
E N E R G Y  :  S E C U R I T Y
Nation'oil'ism?
Russia capitulates... miserably

   TVitals of Russia's oil sector he world might have to depend on Russian oil reserves as other sources run out, but Russia does not seem to be in a position to invest the money needed. At current levels, Russia can't maintain its current production, let alone increase it, without massive investment (about $9 billion a year as compared to $2 billion now). It's zealous 'resource nationalism', however, is stunting foreign investment to the point of making it unwelcome. Russia had suspended Royal Dutch Shell's work at Sakhalin-2 citing environmental infractions, and hit the TNK-BP joint venture in Siberia (Kovytka gas field) with a punitive tax of about $1.4 billion, alleging contractual breaches. More recently, it has gained (or perhaps forced) another concession out of the foreign partners in the Salakhin-2 project, the world's largest combined gas and oil field. They have agreed not to recoup their $3.6 billion in capital expenses on a priority basis. This comes close on the heels of Gazprom, Russia's government owned oil giant, taking over the majority stake in the field after accusations and mounting pressure on Royal Dutch Shell and the other foreign partners. Considering that foreign investment is vital to ensuring efficient utilization of a rather valuable resource that Russia possesses, the lethargy and brazen nationalism being exhibited by this fatherland can only jeopardize both the world's future energy security as well as Russia's economic recovery.

  
 
 
       
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