To decode recent maneuvering in the upper strata of petroleum politics, start here: The two American companies rumored to be preparing rival bids for a chunk of soon-to-merge Russian giants OAO Yukos and OAO Sibneft are paired-up former partners of the old Arabian-American Oil Co. (Aramco).
Wall Street Journal reported that ExxonMobil Corp. and ChevronTexaco Corp. are considering offers worth $11 billion for 25% of the imminent Yukos-Sibneft combine. Neither company would comment.
That report followed an unprecedented visit to Russia—now producing a Saudi-scale 8 million b/d of oil—by a high-level Saudi delegation led by Crown Prince Abdullah, which yielded agreements on energy, commercial, and military cooperation.
Signs of interest by American supermajors in Yukos-Sibneft also followed collapse of negotiations between ExxonMobil and the Saudi government over a major investment in gas projects. And they emerged amid concern over jailing of a major Yukos shareholder and other heavy-handed treatment by the Russian government of the company and its politically active president, Mikhail Khodorkovsky.
Commerce and politics are indistinguishable in all this.
Why, for example, did the Saudi gas deal crater?
At the Middle East Petroleum and Gas Conference in Dubai this month, Youssef M. Ibrahim, general manager of the Strategic Energy Investment Group, offered a political interpretation. He said pro-US members of the Saudi royal family had pushed hard for the deal with Exxon Mobil but gave up in the face of criticism from Americans suspicious about Saudi links to terrorism.
Others have said the agreement under negotiation, covering everything from development through distribution, simply became unwieldy. Deals negotiated later with European companies are less expansive.
Whatever the case, ExxonMobil's quick appearance at the Yukos-Sibneft door is significant for other reasons. Coupled with ChevronTexaco's apparent interest, it shows that Moscow's jerk on the Yukos collar hasn't scared off international capital.
It also reminds Riyadh that Saudi Arabia holds no monopoly over world-class oil and gas opportunities. As Eurasia Group analyst Crispin Hawes said at a recent meeting in Houston, Saudi Arabia now needs the investment clout of big companies at least as much as companies need Saudi Arabia.
(Online Sept. 19, 2003; author's e-mail: [email protected])