Petrostate:Putin, Power, and the New Russia

by Marshall I. Goldman

  Halliburton and, 70, 79

  Kazakhstan, gas pipeline and, 149, 154

  Cherkesov, Viktor, 200

  Chernogorneft oil fields, 69–70, 86

  Chernomyrdin, Viktor, 48, 59–61, 100–101, 104–5, 140, 226

  Chevron, 44, 86, 111–12

  Chief Oil Committee (Glavny Nefitanoi Komitet), 27

  China

  economic blockades against, 221n77

  gas to, 111, 162–63, 169, 186–87

  GDP, 78, 90

  increased demand/consumption in, 78–79, 90, 173, 180

  investments abroad, 181, 205

  petroleum to, 49, 111, 115

  pipelines to, 111, 162–63

  China National Petroleum Corporation, 163

  CIA, 15. See also Casey, William

  on banks, 109

  output predictions by, 39, 43, 49–54, 56

  Reagan, Casey and, 49–51, 226

  CIS (Commonwealth of Independent States), 152

  CITIC group of China, 163

  Cleland, David, 99

  Clinton, Bill, 192

  CMEA. See Council of Mutual Economic Assistance

  Cohen, Michael D., 197

  Colbert, Jean-Baptiste, 173

  Cold War, 15, 80, 180

  COMECON. See Council of Mutual Economic Assistance

  “The Coming Russian Boom” (Layard/Parker), 73, 81

  communism

  capitalism v., 58, 73

  collectivization and, 29

  Communist Party, Zyuganov and, 68, 229

  concessions, 23, 49

  for foreigners, 26–27, 39, 174

  Conoco, 84–85

  ConocoPhillips, 85–86

  LUKoil and, 126

  Theede and, 229

  Constantinople, fall of, 17

  consumer goods, 66

  corn-hog cycle, 88

  Council of Mutual Economic Assistance (CMEA, COMECON), 44

  Council of the People’s Commissars (CPK), 27

  CPC. See Caspian Pipeline Consortium

  CPK. See Council of the People’s Commissars

  credit ratings, 81, 204

  Crimean War, 19

  Cuba, 14, 44, 221n77

  cultural differences, 86–87

  currencies

  dollar, euro and ruble as world, 208

  imports/exports and value of, 12, 14

  reserves, 80–81, 91, 187, 203

  Dagestan invasion, 94–95, 172

  Danchenko, Igor, 99

  Dart, Kenneth, 107, 108

  debt, post-1998 recovery and, 75–77, 81, 91

  de Gaulle, Charles, 99, 173

  Degolyer-McNaughton, 87

  Delay, Tom, 177, 178, 225

  denationalization, of Baku, 25, 27

  depressions, 23, 30, 32

  Deripaska, Oleg, 226

  Gutseriev, Russneft and, 124, 227

  investment abroad, 204

  Putin and, 124, 226

  Rusal and, 181, 226

  Deutsche-Russische Naptha Company, 28

  Dienes, Leslie, 182

  Dresdner Bank, 158–59, 229

  drilling technology, 10–11

  assistance with, 22, 26, 31, 79–80, 84, 91, 129, 174

  planning, production, innovation and, 39–42

  Dudley, Robert, 91, 226

  Dutch Disease, 12–14, 190

  Dutch East Indies, 21

  EADS (Airbus parent company), 203

  earth warming, 184, 207

  Eastern Oil Company, 111

  economic challenges, 202

  economic crimes, 67, 101, 105

  economic imperialism, 172–76

  economy. See also balance of trade, Soviet; financial crash, of 1998; incentive systems; privatization; recovery

  energy resources and, 11–15, 32, 48–49, 88–89

  USSR collapse and, 49–54, 55–57

  efficiency, problems with, 21, 39, 40

  electricity

  British, 168

  disruptions in, 150

  gas for, 182

  nuclear energy for, 181

  Embaneft, 27

  Emba, oil fields at, 22, 27

  embargoes

  on Georgian imports, 150

  oil, 25–26, 32, 44, 47, 82, 137

  price cutting, OPEC and, 46–47, 82

  energy reserves. See also specific countries

  Grace on, 87, 183, 216n48, 217n51

  size of, 90–92

  as state secret, 87

  energy resources

  alternative, 89, 180–81

  conservation of, 78–79

  development of, 10–11, 21, 22, 24, 71, 181–84, 188

  economy and, 11–15, 32, 48–49, 88–89

  exploration/discovery of, 18, 34, 38, 79, 90, 127–29

  increased demand for, 77–79, 89–90

  politics and, 3, 7, 11, 13, 14, 48–49, 84–85, 138, 163–64, 169

  energy security, 3, 7

  energy superpower, Russia as, 3, 7, 10, 14–16, 17–32, 97–98

  early years, 17–18

  energy price collapse impact on, 204

  unrestrained, 170–209

  Eni (Ente Nazionale Idrocarburi), 229

  Gazprom and, 167

  Mattei and, 45–46, 227

  petroleum and, 136

  pipelines and, 149, 156

  Enron, 116, 147

  environmental regulations, 113, 157. See also pollution

  E.ON (German gas company), 229

  Gazprom, Gerosgaz and, 222n87

  Ruhrgas, Gazprom and, 167–68, 229, 230

  E Petroleum Handesges oil company, 108

  Epsilon Corporate Finance, 203

  Estonia, 153, 159, 166

  ethanol, 89, 181

  Eural Trans Gas, 146–47, 226

  Europe. See also Western Europe, gas supply to; specific countries

  map of primary Russian gas pipelines to, 8f

  reliance on Russian gas, 166t, 167–69

  European Commission, 205

  Evans, Donald, 176

  exports. See also petroleum exports

  duties, and transit fees on gas, 151, 159

  Russian imports and, 92t

  timber, 29

  Exxon-Mobil

  competition with, 97

  Gazprom v., 142

  Raymond and, 228

  in Sakhalin, 72, 128–29, 131, 135

  Yukos and, 86, 112–13, 115, 123

  “faces in the snow” incident, 102

  Fahd, King (of Saudi Arabia), 51

  FBI, investigations by, 147–48

  Federal Narcotics Control Service (FNCS), 200, 226

  Federov, Boris, 140–41, 226

  Feniks, 108

  filling stations, 31, 126, 200

  Derop, 28

  Getty Oil, 3, 87, 125, 169, 204, 230

  in United Kingdom, 45

  financial crash, of 1998, 14, 60, 73–77, 93–94, 108, 227, 228

  banks and, 74–77, 93, 170

  GDP and, 74, 76, 107

  stocks and, 73–77, 81, 94

  Finansgroup Investment Fund, 228

  Finland

  crude oil from, 45

  gas to, 2, 166, 168

  petroleum to, 49

  Firtash, Dmytro, 146–47, 226

  flaring, natural gas, 42–43, 131–33, 184, 186

  FNCS. See Federal Narcotics Control Service

  FNK (Finansovaia Neftyanaia Kompaniia—Financial Oil Company), 65

  FOP (Friends of Putin), 96, 139, 192, 200

  double dipping by, 194–98

  foreigners. See also specific companies/individuals

  attitude towards, 70–71, 83, 127

  car manufacturers, 202

  concessions for, 26–27, 39, 174

  help from, 31–32, 34

  investments by, 87–88, 98

  opening for, 83–85

  return of, 26–29

  Foreign Trade Organization (FTO), 68

  France />
  nuclear energy and, 137, 181

  pipelines and, 153

  reliance on Russian gas, 166–67, 168

  Fridman, Mikhail, 226

  Alfa Bank and, 64, 66, 226

  TNK and, 64, 66–67, 226, 230

  Front Uni, 25–26

  FSB, 195

  Patrushev as head of, 196, 200, 228

  Putin as head of, 93

  Stepashin as head of, 228

  struggles within, 200

  FTO. See Foreign Trade Organization

  Fursin, Ivan, 147, 226

  Gaddy, Clifford, 98–99

  Gaidar, Yegor, 50, 52, 53, 226

  gas. See natural gas

  Gas Exporting Countries’ Forum. See GECF

  Gasunie (Dutch pipeline company), 167, 229

  Gates, Bill, 59, 115

  Gaz (auto plant), 204

  Gaz de France, 167

  Gazexport, 143

  Gazoviki, 132, 184

  Gazprom, 2

  asset stripping and, 104, 139–41, 143

  BP, Trinidad-Tabago facility and, 131–32, 179

  Chernomyrdin and, 48, 59–61, 100–101, 104–5, 140, 226

  ENI and, 167

  E.ON, Gerosgaz and, 222n87

  E.ON, Ruhrgas and, 167–68, 229, 230

  Exxon-Mobil v., 142

  Federov and, 140–41, 226

  foreign investments, 205–6, 224n55

  gas flow control by, 1–3, 7–9

  government ownership of, 2–3

  Hermitage Capital Management Fund and, 226

  as “holy of holies,” 142–44

  ITERA and, 61, 104–5, 141–42, 146–48, 183

  Kovykta, TNK-BP and, 131–32, 162, 185, 229

  Medvedev, A., and, 3, 143, 163, 169, 227

  Medvedev, D., and, 104, 140, 141, 143, 202, 227

  Miller and, 104, 140–42, 143, 146, 169, 190–91, 200, 227

  Nord Stream and, 157–59, 167, 230

  overcommitment and, 181–84

  ownership of, 83

  as partner, 202–3

  Putin and, 83, 100–101, 104–5, 139–44, 190–91

  reclaiming, 104–5

  Rosneft and, 83, 173, 184, 186, 190–91

  Ruhrgas and, 83, 168, 230

  in Sakhalin, 129–33

  Sibneft and, 123, 184, 186, 230

  skyscraper built by, 198

  as state unto itself, 185–87

  tour/visit to, 1–2

  Ukraine, Turkmenistan and, 146–48, 226

  Vyakhirev and, 48–49, 60–61, 100–101, 104–5, 140–41, 146, 226, 229

  Wintershall and, 157, 167, 230

  Yukos and, 120–21

  Gazprombank, 142

  GazpromExport, 145

  Gazprom Konsern, 100

  Gazprom natural gas pipelines, 1–4, 7–10, 83, 132, 183–84. See also Blue Stream; Nord Stream; SEGP; South Stream

  Baltic Sea bypass and, 156–59

  construction cost of, 197

  expansion abroad, 152, 153t, 154

  Grace on, 132

  pipelines in Asia and, 162–63

  seeking way around, 149–52

  Gazpromneft (formerly Sibneft), 121, 123, 186

  GDP (gross domestic product)

  China’s, 78, 90

  financial crash and, 74, 76, 107

  oil production and, 80t

  recovery of economy and, 96–97

  Russian v. U.S., 56

  GECF (Gas Exporting Countries’ Forum),

  165, 179, 206, 229

  General Electric, 48, 137, 142

  General Motors, 202, 204

  Georgia

  gas supplies to, 49, 168

  import embargo, 150

  pipelines and, 149–51, 152–54, 161–62

  Tbilisi, 20, 149, 154, 161

  Gerashchenko, Viktor, 226

  purge and, 100, 104–5

  Russian Central Bank and, 100, 104–5, 226

  Gergiev, Valery, 93

  Germany

  Derop filling stations in, 28

  exports to Nazi, 28–29, 30, 31

  gas to, 2, 47, 82, 136–37, 153, 157–60, 166–68

  nuclear energy and, 158

  Russian kerosene consumption v., 21

  Gerosgaz, 222n87

  Getty Oil filling stations, 3, 87, 125, 169, 204, 230

  Ghana, 44

  Goldman Sachs, 75–76

  Gololobov, Dmitry, 116, 118

  Gonzales, Alberto, 222n9

  Gorbachev, Mikhail

  1985 perestroika campaign, 52

  financial crash and, 93

  on reform, 60, 106

  Thatcher and, 209

  Gorin, Sergei and Olga, 108

  Gosbank, 105

  Gosplan, 38, 57–58

  government securities, 75–76

  Grace, John, 39, 71, 197

  on energy reserves, 87, 182, 216n48, 217n51

  on Gazprom pipeline, 132

  grain, 24, 29, 52

  Great Britain

  electricity, 168

  gas to, 167, 168–69

  oil exports to, 20

  takeover and denationalization of Baku, 25, 27

  Greece

  gas supply to, 153

  pipeline between Bulgaria and, 161–62

  Gref, German, 96, 182, 192

  Grozneft, 27

  Grozny oil fields, 22, 27, 33

  Guantanamo, 171

  Guinea, 44

  Gulf Oil (Chevron), 44

  Gunvor (petroleum-selling company), 229

  Gupta, Raj Kumar, 110

  Gurov, W., 28

  Gusinsky, Vladimir, 226

  Media-Most and, 102, 103, 226

  politics and, 102–4

  purge and, 100, 102–4, 105

  Gutseriev, Mikhael, 124, 200, 227

  Gyurcsany, Ferenc, 155–56, 227

  Halliburton, 70, 79

  Harvard Management Company, 125

  Hayward, Tony, 127, 227

  Hermitage Capital Management Fund, 143, 226

  Highrock Holding, 147–48

  Hitler, Adolf, 33

  How Russia Became a Market Economy (Aslund), 73

  Hungary

  gas pipelines and, 153–56, 168, 227

  Gyurcsany and, 155–56, 227

  NABUCCO, Austria and, 9–10, 155–56

  reliance on Russian gas, 166

  IMF. See International Monetary Fund

  imperialism, economic, 172–76

  imports

  embargo on Georgian, 150

  exports, currency value and, 12, 14

  Russia as oil importer, 39, 49, 53

  Russian exports and, 92t

  Russian, to U.S., 3–4, 7

  incentive systems, 30, 39–43

  income, per capita, Russia v. Portugal’s, 96

  India, 25, 44

  increased demand/consumption in, 78, 90, 173, 180

  PSAs with, 72

  industrial production, recovery and, 95t, 96–97, 171

  inflation, 13, 56, 57, 58, 66, 74, 79

  Inkombank, 107

  International Energy Agency, 89, 132

  International Energy Authority, 79

  International Monetary Fund (IMF), 75–76, 207–8

  INTERROS, 68–69

  Iran, 13, 46, 186

  gas reserves of, 139

  GECF and, 179

  OGEC and, 164, 165

  Iraq, 46

  LUKoil in, 126

  U.S. and, 52, 71, 199, 207, 208–9

  Isaikin, Anatoly, 193

  Israel, 49

  Italy

  gas to, 153, 166–67, 168

  oil imports, 28

  ITERA, 229

  Gazprom and, 61, 104–5, 141–42, 146–48, 183

  Makarov and, 104, 146, 147, 177, 227

  U.S. grant to/raid of, 177, 222n9

  Weldon’s daughter and, 177, 229

  Ivanov, Sergei, 192, 193, 196

  Ivanov, Viktor, 192, 193

&n
bsp; Ivan, story about, 67

  Ivan the Terrible, 17

  Izvestia, 202

  Jamestown Foundation, 102

  Japan, 12

  conservation in, 79

  pipelines in, 162, 163

  PSAs with, 72

  in Sakhalin, 26, 72, 128–30, 185

  Jetts gas stations, 126

  John Brown Engineering, 48, 138

  Johnson, Alan, 169

  Johnson, Simon, 56

  Karaganov, Sergei, 163–64, 187

  Kaufman, Daniel, 56

  Kazakhstan

  Cheney, gas pipeline and, 149, 154

  pipelines and, 7, 149–50, 153–54, 160–61, 163, 181, 186

  Kazmunai, 163

  kerosene, 17–19, 21

  Kharyaga oil field, 71, 132–33, 135, 229

  KhimProm, 193

  Khodorkovsky, Mikhail, 227

  Lebedev and, 116, 120, 227

  Menatep and, 64, 76, 106–9, 227, 230

  in Nefteyugansk, 65

  Nevzlin and, 228

  Petukhov and, 65, 108–9

  politics and, 103

  purge and, 100, 103, 105–20, 123

  Yukos and, 64, 65, 72, 76, 79, 86, 100, 105–20, 123, 135, 227, 230

  Khrushchev, Nikita, 41, 142

  King, William, 99

  Kiriyenko, Sergei, 94, 109, 227

  “kiting their checks,” 74

  Koch, Roland, 205

  Kogalym oil field, 61

  Kohl, Helmut, 52, 136, 227

  Kolesov, Sergei, 108

  Korneyeva, Valentina, 108

  Korzhakov, Alexander, 65, 102, 227

  Kosachev, Konstantin, 208, 227

  Kosciusko-Morizet, Jacques, 111

  Kostina, Olga, 108

  Kovykta, 131–32, 135, 162, 174, 185, 229

  krisha (roof ), 113

  Kryshtanovskaia, Olga, 192

  Kudrin, Alexei, 96, 192, 201, 227

  Kumarin, Vladimir, 200

  Kursk nuclear submarine, 103

  Kuryer (cooperative), 66

  Kuwait, 46

  land claims, Russian, 207

  Langepaz oil field, 61

  Latvia, 49, 153, 159, 166, 168

  Layard, Richard, 73, 81

  Lebedev, Platon, 115, 116, 117, 120, 227

  Lend Lease contracts, 27, 33

  Lenin, Nikolai, 12, 174

  Lenz, petroleum reserve data and, 87

  Libya, 13

  Lietuvos Dujos, 168

  life expectancy, 198

  Lithuania, 49, 153, 159, 166, 168

  Litvinenko, Alexander, 208, 227

  LNG (liquified natural gas)

  spot market for, 139, 165, 179, 181

  tankers for, 47–48, 82, 138

  to U.S., 4, 7, 132, 179, 206

  Loans for Shares, 64–65, 76, 106, 146

  Potanin and, 63–65, 68

  Rosneft and, 62, 64–65, 121–22

  Long Term Capital Management (LTCM), 76–77

  Loze, Bernard, 110–11

  LTCM. See Long Term Capital Management

  Lugar, Richard, 164

  Lugovoi, Andrei, 208, 227

  Lukashenko, Alexsander, 151, 227

  LUKoil, 230

  Alekperov and, 61, 65, 85, 125, 197, 225, 230

  ConocoPhillips and, 126

  Getty Oil filling stations purchased by, 3, 87, 125, 169, 204, 230