Russia's Oil Industry: Risk Aversion in a Risk-Prone Environment

State governance evolution in resource-rich transition economies: An application to Russia and Kazakhstan

“…Diffuse property rights have been instrumental in ensuring diffusion of rent amongst economic/industrial and bureaucratic (federal and regional) structures and actors alike (Gaddy and Ickes, 2005;Kryukov and Moe, 2007). An interpretation of Rosneft's growth and role should thus also reflect a hardening of the prospective rent base as production growth slows and short-term production maximising practices are exhausted.…”

“…A principal objective of Russia's energy strategy is also to ensure continued energy independence. In this respect a frequent concern has been the low level of exploration activity and progression of uncertain reserves along the reserve pyramid (Kryukov and Moe, 2007). A principal barrier to achieving this end has however, not necessarily been low level of state ownership (or c), but a licensing system and a diffuse property rights environment that rewards short-term production maximisation (Kryukov and Moe, 2007).…”

“…PSAs would require a higher degree of information disclosure from the Russian majors and thus reduce their control over flows of revenue and information-control that currently benefits from institutional opacity (Locatelli, 2006) and amortisation practices in the Russian oil industry (Kryukov and Moe, 2007). Where PSAs would create ''fixed'' reference points for calculation of tax, investment procedures, use of underground resources, costs and taxation for foreign investors, this may not necessarily be welcomed by the Russian majors (Konoplyanik, 2003).…”

“…In this respect a frequent concern has been the low level of exploration activity and progression of uncertain reserves along the reserve pyramid (Kryukov and Moe, 2007). A principal barrier to achieving this end has however, not necessarily been low level of state ownership (or c), but a licensing system and a diffuse property rights environment that rewards short-term production maximisation (Kryukov and Moe, 2007). One argument is that privatisation in a weak market institution environment ''locked'' the oil industry into an institutional path undermining longterm viability; and that renewed state control would ''unlock'' such an institutional impasse (Locatelli, 2006).…”

A neoinstitutionalist interpretation of the changes in the Russian oil model

“…Half of the additional reserves in 2005-2006 were in fact attributable to a reassessment of the potential of existing reserves in light of the use of new technologies. They were not newly discovered reserves (Kryukov and Moe, 2007). Furthermore, the contribution of proven and recoverable reserves (categories A+B in Soviet classification) to the overall total of explored reserves has dropped considerably (Dienes, 2004), falling from 67.8 % in 1958 to only 26.5 % in 2000.…”