49
Russia Under Putin’s Rule
Putin imparted accusations against the oil industry for making retirement subsidy
payments and military expenditures. Putin promoted stability in Russia against the
chaotic years during Yeltsin’s administration. Sixty percent of the Russian oil, which
is inexpensive, still comes from the “popular assets” established during the Soviet
Union. On the other hand, new fields in Eastern Siberia are highly costly owing to
not only the distance and the weather conditions but also the geologic features of the
Siberian plateau, which make access difficult (Raszewski 2018:29).
During the 1990s, foreign oil companies were banned from holding shares in
privatization, with the exception of several offshore projects in Sakhalin, in the far
east of Russia, where Russian companies did not have the technological expertise.
In 1996, with the signing of PSA for Sakhalin 1 by ExxonMobil together with
Sodeco, Rosneft, and India Videsh partners production was initiated in 2005. The
Sakhalin II oil and gas project was implemented under the PSA in 1999, which
guaranteed Shell and its partners, Mitsui and Mitsubishi, with an output of 17.5%.
Shell was pushed toward transferring a significant portion of its shares to Gazprom
in 2006 for $7.5 billion against higher costs and environmental damage charges
(Raszewski 2018:30).
There are criticisms against Russia’s dependence on its energy exports. Liberals
have the desire to diversify the economy so that it is not solely dependent on oil and
gas. They want to achieve this by promoting increased liberalization in order to
encourage small businesses and foreign investments. The primary achievement of
the liberals, who are under the control of the Ministry of Finance and the Central
Bank, is the foundation of a Stabilization Fund toward the stabilization of oil revenues. The oil revenues are currently allocated to various funds, namely the reserve
fund and the national welfare fund. This has a positive influence on inflation and the
maintenance of a balanced budget. On the other hand, nationalist economists, such
as Sergey Glyzov, utilize petroleum recycling by means of a campaign to make
investments in infrastructure and production. They enforce protectionist tariffs to
impede imports and impose control over the capital so that its flow is prevented
(Raszewski 2018:31).
In the year 2000, Russia produced new gas pipelines in the Baltic Sea and the
Black Sea to seize Belarus and Ukraine. In the year 2005, Putin and Gerhard
Schroeder, a former Social Democrat president, transported gas from Russia directly
to Germany with the construction of a new gas pipeline through Gazprom, and a
Nord Stream pipeline across the Baltic. In 2005, the construction of a gas pipeline
in the Black Sea to Turkey, called “Blue Stream,” was completed, and in 2007, Putin
made the announcement of a South Stream gas pipeline from the Black Sea to
Bulgaria, continuing to Italy and Hungary (Raszewski 2018:32).
As always, geography plays a key role in the country’s energy policy and export
projects. Russia can supply gas directly to both of the world’s most voracious energy
consumers, China and the EU. On the other hand, geography also makes Russia
essentially a landlocked state in all but name, as icy weather means Russia is unable
Russia
Russia Under Putin’s Rule
Putin imparted accusations against the oil industry for making retirement subsidy
payments and military expenditures. Putin promoted stability in Russia against the
chaotic years during Yeltsin’s administration. Sixty percent of the Russian oil, which
is inexpensive, still comes from the “popular assets” established during the Soviet
Union. On the other hand, new fields in Eastern Siberia are highly costly owing to
not only the distance and the weather conditions but also the geologic features of the
Siberian plateau, which make access difficult (Raszewski 2018:29).
During the 1990s, foreign oil companies were banned from holding shares in
privatization, with the exception of several offshore projects in Sakhalin, in the far
east of Russia, where Russian companies did not have the technological expertise.
In 1996, with the signing of PSA for Sakhalin 1 by ExxonMobil together with
Sodeco, Rosneft, and India Videsh partners production was initiated in 2005. The
Sakhalin II oil and gas project was implemented under the PSA in 1999, which
guaranteed Shell and its partners, Mitsui and Mitsubishi, with an output of 17.5%.
Shell was pushed toward transferring a significant portion of its shares to Gazprom
in 2006 for $7.5 billion against higher costs and environmental damage charges
(Raszewski 2018:30).
There are criticisms against Russia’s dependence on its energy exports. Liberals
have the desire to diversify the economy so that it is not solely dependent on oil and
gas. They want to achieve this by promoting increased liberalization in order to
encourage small businesses and foreign investments. The primary achievement of
the liberals, who are under the control of the Ministry of Finance and the Central
Bank, is the foundation of a Stabilization Fund toward the stabilization of oil revenues. The oil revenues are currently allocated to various funds, namely the reserve
fund and the national welfare fund. This has a positive influence on inflation and the
maintenance of a balanced budget. On the other hand, nationalist economists, such
as Sergey Glyzov, utilize petroleum recycling by means of a campaign to make
investments in infrastructure and production. They enforce protectionist tariffs to
impede imports and impose control over the capital so that its flow is prevented
(Raszewski 2018:31).
In the year 2000, Russia produced new gas pipelines in the Baltic Sea and the
Black Sea to seize Belarus and Ukraine. In the year 2005, Putin and Gerhard
Schroeder, a former Social Democrat president, transported gas from Russia directly
to Germany with the construction of a new gas pipeline through Gazprom, and a
Nord Stream pipeline across the Baltic. In 2005, the construction of a gas pipeline
in the Black Sea to Turkey, called “Blue Stream,” was completed, and in 2007, Putin
made the announcement of a South Stream gas pipeline from the Black Sea to
Bulgaria, continuing to Italy and Hungary (Raszewski 2018:32).
As always, geography plays a key role in the country’s energy policy and export
projects. Russia can supply gas directly to both of the world’s most voracious energy
consumers, China and the EU. On the other hand, geography also makes Russia
essentially a landlocked state in all but name, as icy weather means Russia is unable
Russia