Russian advocates of a market economy are skeptical of claims there will be significantly less government control over the oil industry.
They aired their views after President Boris Yeltsin issued a draft decree for a measure of privatization in Russia's oil production, refining, and marketing (OGJ, Nov. 9, p. 37). Critics say that during the near term, at least, most of the oil industry will remain in the tight grip of the state, with private interests holding only a small portion of the capital shares in new joint stock companies.
Heightening their belief that free market conditions won't soon prevail in the petroleum industry are reports regarding another proposed presidential decree on Russian gas industry reform. Entrepreneurs assert this measure will, in fact, enable state owned Gazprom to maintain or even expand its monopoly.
FORM, NOT REALITY
Commersant, a Moscow business weekly publication, declared the draft decree transforming state owned oil enterprises into joint stock companies is consistent with market economics only in form, not reality. Commersant said the decree promotes total state control over the oil sector.
"Under the plan, the state will have controlling interest in all new oil corporations for at least another 3 years," Commersant said. "State owned blocs of shares will be managed by the government's Rosneft company, and Rosneft's board of directors will be appointed by the Russian government from representatives of state management bodies.
"Rosneft will be founded by the State Committee for Property, but its policies will be determined by the Ministry for Fuel and Energy. Then Rosneft will hand over shares to competing trusts and holdings, but this will happen only after government authorities decide conditions are right.
"The decree pays tribute to market economics in an effort to impress western investors and international financial organizations that have long called on Russia to reform its oil industry. At the same time, the plan emphasizes the need to preserve state control over the oil industry 'because of its importance to the economy in general.'"
ANOTHER CRITIC
Even Moscow's Izvestia newspaper, a strong supporter of the Yeltsin regime, lambasted the proposed presidential decree to transform Gazprom into a Russian joint stock company.
"The main thing is that the draft decree regarding Gazprom actually secures the firm's monopoly position in the Russian gas market," Izvestia said. "This supermonopoly would grab for itself not only the gas pipeline system but gas production and the related part of the machine building industry.
"All attempts by opponents to this approach, who favor separation of gas production from transmission or want in some other way to demonopolize this sector, receive a hostile reception. Gazprom is being given the opportunity to remain the world's largest monopoly.
"Experts close to government circles suggest that preparation of this gas industry decree was the result of direct pressure by the energy lobby. It apparently convinced President Yeltsin that without such a measure everyone would suffer from lack of heat during the coming winter, and the entire nation would freeze."
Copyright 1992 Oil & Gas Journal. All Rights Reserved.
