David Frum

10.30.12

Russia Re-Nationalizing Its Oil

With the buy-out of BP by the state-owned oil company Rosneft, Russia has just taken another step to bringing its oil industry back under state control. In fact, we may be witnessing the largest re-nationalization in the history of the world.

The $55bn TNK-BP deal deal in effect removes one of Russia’s last remaining private oil companies – other companies such as Yukos and Sibneft were bought or bankrupted over the past decade of statist rule by Vladimir Putin. And with the departure of AAR, TNK-BP’s 50 per cent owners, there are no independent-minded billionaires of any weight left in the oil business, except for possibly Lukoil’s CEO Vagit Alekperov.

The Rosneft deal also demonstrates the strength of statists such as Igor Sechin, Rosneft’s CEO, whose political heft has risen dramatically under the third presidential term of Vladimir Putin, compared with under the relatively liberal president Dmitry Medvedev, who stripped Sechin of his chairmanship of Rosneft’s board.