Gazprom
The economic rules in Russia may no longer be based on Marxism-Leninism, but the country is still not part of the capitalistic game. Just ask former Yukos head Mikhail Khordokovsky, convicted of tax evasion in a prosecution generally considered to be a political vendetta. His oil company saw its major assets auctioned off in 2004 to Baikalfinansgroup, a shadowy Russian investment group. That company in turn sold off its assets to state-owned oil company Rosneft. The Russian government planned to have Rosneft acquired by Gazprom, but that deal fell through after he Yukos deal..
Gazprom now commands a wide empire, with sales of $31 billion in 2004. It is the #1 natural gas extractor in the world, owning over 90% of all Russia's enormous gas reserves and 25% of the world's. It is a major supplier of gas and owner of pipelines to central and eastern Europe, and is building major pipelines to China as well. 50% of the Gazprom is now owned by the Russian government., and the company contributes about one quarter of the country's tax revenues.
And recently it announced that it would acquire Sibneft, Russia's #5 oil company. (Neft is the Russian word for petroleum.) The $13.1 billion deal. Sibneft has control of about a third of Russia's crude oil production. The financing for the deal was backed by Western European banks.
Curiously, Yukos and Sibneft were slate dto merge a few years ago, until the deal was calle dofff by teh government a few years ago.
The move puts an end to an era of privatized oil companies, the ones founded by the so-called "oligarchs", who snapped up valuable assets on the cheap after the collapse of the Soviet state. In fact, Sibneft's own oligarch Roman Abramovich, is doubtless happy to avoid Khordokovsky's fate and exit will full pockets. Analysts note that the real value of Sibneft in an open market, might be twice as high.
In Russia, Gazprom is really a monopoly. And it exists somewhere between being a publicly traded company and a state-owned business, an arm of Russian government policy. The emergence of an even stronger big business in the energy sector is interesting, but don't expect Gazprom to act like ExxonMobil or other companies that are independent of government control. New oligopoly is not the same as state oligopoly.
