The Rise and Fall of Privatization in the Russian Oil Industry (St. Antony's Series)

228 Pages·2008·0.7 MB·English

by  Li-Chen Sim

The Rise and Fall
of Privatization in the
Russian Oil Industry
Li-Chen Sim
FM.qxd 7/29/08 9:41 Pagei
St Antony’s Series
General Editor: Jan Zielonka (2004), Fellow of St Antony’s College, Oxford
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The Rise and Fall
of Privatization in the
Russian Oil Industry
Li-Chen Sim
Assistant Professor, Zayed University, United Arab Emirates
In Association with
St Antony’s College, Oxford
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© Li-Chen Sim 2008
All rights reserved.No reproduction,copy or transmission of this
publication may be made without written permission.
No portion of this publication may be reproduced,copied or transmitted
save with written permission or in accordance with the provisions of the
Copyright,Designs and Patents Act 1988,or under the terms of any licence
permitting limited copying issued by the Copyright Licensing Agency,
Saffron House,6-10 Kirby Street,London EC1N 8TS.
Any person who does any unauthorized act in relation to this publication
may be liable to criminal prosecution and civil claims for damages.
The author has asserted her right to be identified as the author of this
work in accordance with the Copyright,Designs and Patents Act 1988.
First published 2008 by
PALGRAVE MACMILLAN
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Palgrave® and Macmillan® are registered trademarks in the United States,
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ISBN-13:978-0-230-20298-6 hardback
ISBN-10:0-230-20298-5 hardback
This book is printed on paper suitable for recycling and made from fully
managed and sustained forest sources.Logging,pulping and manufacturing
processes are expected to conform to the environmental regulations of the
country of origin.
A catalogue record for this book is available from the British Library.
Library of Congress Cataloging-in-Publication Data
Sim,Li-Chen,1972-
The rise and fall of privatization in the Russian oil industry /
Li-Chen Sim.
p.cm.— (St Antony’s series)
Includes bibliographical references and index.
ISBN-10:0-230-20298-5 (alk.paper)
ISBN-13:978-0-230-20298-6 (alk.paper)
1. Petroleum industry and trade—Russia (Federation)
2. Privatization—Russia (Federation) 3. Industrial policy—Russia
(Federation) I. Title.
HD9575.R82S458 2008
338.2'7280947—dc22 2008016422
10 9 8 7 6 5 4 3 2 1
17 16 15 14 13 12 11 10 09 08
Printed and bound in Great Britain by
CPI Antony Rowe,Chippenham and Eastbourne
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For my parents,
Mike and Anne
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Contents
Acknowledgements viii
Notes on Transliteration and Translation ix
List of Abbreviations x
List of Principal Political and Economic Actors in the Book xi
1 Introduction to the Policymaking Process 1
2 The Initiation and Spread of Privatization 16
3 Case Study of YUKOS 49
4 Case Study of Slavneft’ 76
5 Case Study of Rosneft’ 99
6 Conclusion 119
Appendix 1 131
Appendix 2 132
Notes 133
Bibliography 183
Index 209
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Acknowledgements
When I first embarked on my research, I had little idea of what I was
letting myself in for – the mountains of material to sieve through, the
periods of self-doubt, the stages of writer’s block. The fact that this book
has seen the light of day is a testament to people who have helped me
along the way, and to whom I owe a great debt of gratitude.
My thanks go out to my mentor, Prof. Archie Brown, for his unflag-
ging optimism that the project would one day be published. By playing
the devil’s advocate – which sometimes kept me up at night thinking of
a suitable rebuttal – he forced me to examine, refine and strengthen my
arguments and to see the merits of alternative perspectives. His gen-
erosity with his time and advice as well as his personal kindness are
much appreciated. Dr Paul Chaisty and Prof. Thane Gustafson, who
read an earlier draft of the manuscript, kindly shared with me invalu-
able suggestions on getting my work ready for publication. However,
none of them bear any responsibility for errors of fact or judgement.
Research for this book was conducted over a number of years in both
the United Kingdom and Russia. I am greatly indebted to persons I have
interviewed in the course of my research. They were without exception
generous of their time, forthcoming with information and did not shy
away from dealing with sensitive and awkward issues concerning oil
privatization, even when some interviews were conducted in the midst
of the YUKOS affair. It was certainly a real privilege for me to engage
with participants who have directly influenced the policy process in
Russia. I would also like to acknowledge the generosity of organizations
such as the Oxford Institute of Energy, the Bodleian Library (University
of Oxford), the Russian & East European Studies Centre at St Antony’s
College (University of Oxford) and the Kommersant’ group (Moscow),
which made available their holdings on the topic; and consultancy
firms such as Troika Dialog, Renaissance Capital and Aton, which did
not hesitate to share their well-researched reports on the Russian oil
industry.
Most important of all, I wish to thank my parents, Mike and Anne, to
whom this book is dedicated, for their unstinting and constant support
in everything that I do; and my husband, Frank, for his love, encour-
agement, humour (when it was most needed) and patience.
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Notes on Transliteration
and Translation
This book uses the transliteration system adopted in The Cambridge
Encyclopedia of Russia and the Former Soviet Union and Post-Soviet Affairs
whereby:
e (cid:2) e (except at the beginning of a word or name, such as Yevgeniy)
Й (cid:2) y
ы (cid:2) y
ь (cid:2) ’
ю (cid:2) yu
я (cid:2) ya
When referring in the text to a work published in English by a Russian
author, the name will be transliterated according to the above system
(for example, Yuliya Latynina, Yegor Gaydar). However, in the footnotes
and bibliography, the name will be cited as it appears in the original
language of the source (for instance, Julia Latynina, Yegor Gaidar). An
exception is made if the subject is well known in the English-speaking
world and uses a modified transliteration of the name. Hence, the book
refers to LUKoil and not LUKoyl, and to Rair Simonyan not Rayr
Simonyan.
All translations from Russian sources are by the author, except where
otherwise indicated.
ix