In the “Why Does It Cost So Much?” Category
…add yet another entry.
BP’s rivals shift in Russian tussle
The fate of the second biggest foreign investment in Russia hangs in the balance amid signs of a shifting mood in the Kremlin which may have wrong-footed investors and one of the world’s biggest oil companies.
… TNK-BP, a highly lucrative 50-50 joint venture between BP and four Russian-connected billionaires, began in 2003 amid much fanfare in a deal blessed by then-president Vladimir Putin. It produces a quarter of BP’s global oil output and posted a net profit of $5.7 billion last year.
TNK-BP’s first five years were a success story. Former BP managers working at the venture talk with pride of how they improved management of oilfields using the latest technology, cut back leaks, and boosted operating efficiency.
… So when a campaign against TNK-BP suddenly started this year involving tax police, alleged labor code violations, security service sweeps and court cases, many assumed the Kremlin was pressuring the firm to accept a state partner.
A similar barrage of official harassment was unleashed in 2006 against Royal Dutch Shell to force it to sell a controlling stake in its giant Sakhalin gas venture to Russia’s state-dominated energy champion Gazprom.
The American public acts like the world does business just like US companies have to here. I can’t think of many places besides the United States where your investment in exploration, development and infrastructure is safe from nationalistic meddling.
-Putin sets the hook.
Of course, if America is utilizing her own national resources, foreign upsets in the supply chain won’t hit as hard.
But, nowadays, that’s a foreign concept.
Biz | tree hugging sister | 
July 7, 2008 12:01 am
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I hope you’re right about US companies being safe from nationalistic meddling, but I’m a bit more cynical. Sure, it’s better here, but we still have government refusing to allow exploration under the guise of environmentalism. This lame excuse is no less legitimate than Putin’s claims of labor code violations. Both are attempts to control a business.
Remember that microsoft was about to be destroyed by congress until Bill Gates finally decided to stop being arrogant, caved in and started donating money to politicians. He had thought that we had “free” enterprise in this country until they came gunning for him about ten years ago.
This is different, Skyler. Microsoft richly deserved most of the anti-trust bombardment from every corner that they got back in the 90s.
Oh, they definitely were the 1900 pound gorilla in the room, Rob. ‘Gunning’ for Microsoft was consumer driven ~ shit, you still feel like chattel with every computer purchase (Waiting for Bingley’s “unless you go Apple” in 3…2…1…)
Putin’s claim of labor and tax violations are the trigger to allow the GOVERNMENT to take over the company ~ something that most assuredly would NEVER happen in the US. Refusing to allow exploration is POLITICAL and doesn’t come close to nationalizing an independent oil company’s assets. Of course, AFTER they’ve done all the heavy lifting and crude is finally flowing. BIG difference there.
Oh, sure, I have no love for microsloth at all. I’m a macintosh fan through and through, starting from when I worked for Apple in the 90’s.
But congress’ gunning for MS had very little to do with anti-trust. Notice that MS hasn’t changed much, except to donate to politicians and set up charities, and suddenly the politicians are no longer gunning for them. They still operate under the FUD principle and try to dominate everywhere.
And that was only meant as an example. The same is true of other industries as well.
The difference is that Putin wants control of the resources, a la’ Soviet-era style of government. Here in the US of A, the politicians merely want the American version of bakeesh: legal contributions to their campaign chests. Not control of the resources.
Even the Dhimmicrat cretins who want to nationalize the oil industry are in the minority. It would take a shift in government to let that happen.