Yukos II?

The Russian government's recent moves against TNK-BP, the main Russian joint venture of BP, echo the early stages of its 2004 battle to re-nationalize the giant independent oil producer Yukos. With oil and gas providing much of the country's substantial trade surplus, as well as its most effective levers of regional influence, the temptation to bring the entire energy sector under state control must be enormous. If TNK-BP ultimately goes the way of Yukos, it won't just be BP's shareholders who will feel the consequences.

At the time Yukos was broken up and then absorbed into Rosneft, it was still possible to wonder if President Putin were merely settling a vendetta with Mikhail Khodorkovsky, Yukos's high-profile CEO, rather than reasserting state control over Russia's key energy sector. After the forced semi-nationalization of Shell's interest in the Sakhalin II project, and with foreshadowing from earlier moves against TNK-BP, there's little room left for doubt. Nor should we forget that the previous position held by the new President of the Russian Federation, Mr. Medvedev, was as chairman of the state gas monopoly, Gazprom. You don't have to like conspiracies to see Russia's "investigation" of TNK-BP's as the coordinated application of state power between an assertive government and its principal energy arm.

Like Yukos at its peak, TNK-BP has been very successful at growing its substantial reserves and production, in contrast to the slowing production growth for Russia as a whole. Together with the growth of Russia's domestic economy, this has resulted in oil exports recently stalling at about 7 million barrels per day (MBD), from which level they may soon begin to decline. With oil at $100 per barrel, though, Russia's economy now has more in common with that of OPEC's larger members than with non-OPEC producers that typically benefit more from lower oil prices. Has the growth of TNK-BP threatened a shift in Kremlin oil strategy, or does it simply make the company too attractive a target for the state to ignore?

The recovery and expansion of Russian oil output following the collapse of the Soviet Union played an important role in pushing global oil production beyond 80 MBD. Now, a Russia that acts increasingly like a member of OPEC, not just in its production policy, but in the restrictions it places on allowing access to its reserves for foreign firms and capital, makes it harder to envision the future growth of global oil and other liquids production matching forecasts of 100 MBD or more of supply by 2030.