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Financial Post: Putin’s grip on oil good for Canada, bank says

Financial Post [email protected]

CALGARY • Russian President Vladimir Putin’s tightening grip over his country’s oil sector is good news for Canadian energy companies looking to invest there, said a top official with the European Bank for Reconstruction and Development.

First vice-president Varel Freeman said the Russians are making their rules clearer, which should mean fewer surprises for foreign investors.

“We feel that it’s going to be a lower-risk situation as the rules become part of laws and part of a stated practice and regulatory framework,” said Mr. Freeman, who is based in London and was visiting Western Canada late last week. “You will know the risks that you are taking, the rules of the game with which you have to work.”

Russian government moves like the forced bankruptcy of Yukos and its grab of half of Royal Dutch Shell PLC’s stake in the Sakhalin-2 venture, which is building Russia’s first liquefied natural-gas export terminal, have dampened Western companies’ enthusiasm for a piece of Russia’s vast oil and gas riches.

Mr. Freeman said there are still opportunities for Canadian companies large and small, particularly now that softer oil prices are forcing the high-cost Russian oil sector to be more efficient.

Marginal production costs for oil in Russia are high by international standards because of its geology and the organizational and technological backwardness of its industry, the bank says. Weaker oil prices could slow its development.

“Russia is a resource-rich country, but it is a technology hungry country. And what do Canadian companies have to offer to their Russian partners? Technology, market access, business acumen,” Mr. Freeman said.

Canada is one of the founding members of the EBRD, established in 1991 to help 29 former communist countries to make the transition to a market economy by partnering with private companies. Russia is the bank’s major area of focus. and its sister websites,,,,, and are all owned by John Donovan. There is also a Wikipedia article.

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