The Russian power play on oil, natural gas reserves

THE LAST few years have been humbling for multinational energy corporations, which until recently were the most self-assured, if not arrogant, businesses in the world. This change in status has been particularly dramatic in Russia, where nearly every foreign private energy corporation has met its comeuppance. Yet these same foreign operators endure the pain and smile helplessly as their operations are whittled away and effectively nationalized.

No less than Russia’s one-sided battle with tiny Georgia, the multinationals’ acquiescence reflects Russia’s reemergence as a superpower. But unlike during the Cold War, when the US nuclear arsenal served as a check on Russia’s nuclear arsenal, today there is no such check on Russian energy dominance.

With oil and natural gas prices near record highs, energy producers are rushing around the world seeking new supply. Each year the search becomes more difficult. In those few countries where it is thought that there are still reserves to be discovered and extracted, such reserves are mostly located offshore or in difficult to reach deposits. Virtually all the host governments today insist on a larger cut of the revenue, or even exclusive production rights for their own domestic companies.

Boston Globe