Sep. 19, 2007
The processes of nationalization in the oil sector are more visible than others and filled with more drama. Still, the state’s desire to capture an ever larger slice of the industy’s income seems logical. But often the methods and appetite of the state companies contradict this logic.
The Creativity of Capitalism
Looking back at the history of the Russian oil industry we find its initial privatization had taken place that by the end of 1997. The state retained about as many companies as it sold, although it often controlled larger and better shares. At the time, the only national company among them was Rosneft with enterprises dispersed across the entire country, from the Far East (Sakhalinmorneftegaz, with an interest in Sakhalin-1 and Komsomolsky oil refinery) to the Southwest (oil production in the Krasnodar and Stavropol regions and Tuapsinskiy oil refinery). But with only one sizable production plant (Purneftegaz in western Siberia). In addition, the government owned Tatneft, Bashneft, Bashneftekhim, which all had connections to the regional elite; company ONAKO Slavneft, created as a Russian-Belarusian project with production in Siberia and refinement in Belarus, which was limited to Russian shares as a result of Belarus’ refusal to offer a stake in the Mozyrsky oil refinery. This was all poorly managed and obviously a project left uncompleted. read more
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