CNBC’s Yergin: Russia Attracting More Western Companies

The Putin Administration continues to be intent on revising to one degree or another the oil and gas deals that were done in the middle 1990s. The actual rewriting varies from one deal to the next. So you don’t see the same kind of enthusiasm in energy that is evident in other sectors. There’s a lot of uncertainty, frustration, and pessimism about policy, decision-making and about the role of foreign capital in the energy sector. Also, exploration and development costs have been rising substantially in Russia, as elsewhere, but, at least in the mature region of West Siberia, this goes unrecognized by the very high tax rate.. Yet the resource potential is so great that the major companies can’t easily stand aside. There are two critical things that they are waiting for, both of which are promised by the end of the year. One is the definition of “strategic sectors” and how those sectors will be managed — in which oil and gas are at the top of the list. The other are the “rules of the road” for exploration and development in the off-shore and Artic, which will be high cost, challenging technically, but are very high potential.

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