Gazprom night

Under Russian accusations of environmental violations,
Shell sold control of the Sakhalin energy project, above, to a government monopoly.

When the Yukos Oil Company and its chief, Russian billionaire Mikhail Khodorkovsky, came under attack by the Russian government of Putin, it was widely believed that Putin was silencing a critic and potential political foe. Khodorkovsky tried to fight off the appropriation of Yukos, then one of the world's largest non-state owned oil companies, and found himself arrested and sentenced to nine years in prison. Trumped-up charges of tax evasion on Yukos profits was the line the Prosecutor General followed and despite Yukos filing for bankruptcy protection, the state forced the sale of Yukos holdings. These were bought up by the Baikal Finance Group, a previously unknown company thought to comprise Russia's state-owned oil company, Gazprom, as well as the Russian central bank. The larger message resounded throughout the oil industry.

Which is why the latest acquisition by Gazprom is, to say the least, interesting. Royal Dutch Shell recently "sold" controlling interest in its largest oil and gas facility to the Russian-owned Gazprom after Putin's government claimed that Shell was violating "environmental regulations." Given the bleak environmental history of the former Soviet Union, many were surprised to learn that Russia actually had environmental regulations. But apparently they do and they are used as a cudgel when Putin wants something. The Sakhalin energy project is described as "the world’s largest combined oil and natural gas development" and critics have called the move the "first effective nationalization of a large foreign oil or gas project in Russia." As with Yukos, analysts say that Gazprom paid "below market rate" for the asset. Last year, Russia became the world's largest oil producer after effectively surpassing Saudi Arabia in output.

Undoubtedly, Shell was violating environmental law at some level. What big oil company operating in remote corners of the world doesn't? The United States has plenty of experience with Big Oil's behaviour in the wilderness, so such charges are entirely believable. Of course, we don't nationalize those companies, preferring to hand out a wrist-slap and a few more tax incentives instead. But the sheen that Shell's CEO, Jeroen van der Veer, rubbed onto the deal was particularly amusing. After months of hostile pressure, including threats of a shut down of operations, van der Veer said the sale was "great news."

I think the great news is that now there is stability so we can all work together, all the shareholders, to get the project up and running as soon as possible.

In other words, whew, I didn't wind up in some god forsaken gulag like Khodorkovsky, because when I say "stability," I really mean bending to Putin's will.

Now that the issue of majority stakes in the oil facility have been secured by Russia's own oil company, Putin said that the environment issues will mostly likely be resolved. No doubt. In fact, I would say the sale guaranteed that the environmental concerns of operations at the site have suddenly, miraculously gone away.

While Bush is busy stirring up the shit in the Middle East and threatening more of it, Putin has been conscientiously moving Russia into a position as world oil leader. And while Russia only strengthens ties with Iran and Venezuela, don't look for our relationship with the Kremlin to continue with the somewhat benign indifference that Russo-American relations have experienced these last few years. What we are seeing here is a direct result of the Bush administration's foreign "policy," which has done nothing but strengthen the position of Iran, China and Russia on the world stage. While the United States remains bogged down in Iraq, squandering hundreds of billions of dollars on death and mayhem, those countries have been doing deals, firming ties and consolidating resource assets even as Bush further threatens more war. As with everything else coming out of the White House, this is yet another very distressing result of the neocon agenda. Could these people have been any more wrong?