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Russia’s oil majors are going, going… but nowhere near gone.

In February, there were six major companies. In terms of oil revenues, the largest was LUKoil, followed by Yukos, Surgutneftegas, Sibneft, Tyumen Oil Co. (TNK) and Tatneft. Measured according to market capitalization at the time, their order of precedence was a little different. Yukos came first, followed by Surgutneftegas, LUKoil, Sibneft, TNK and Tatneft. Measured by growth of oil production, Sibneft somersaulted to the front, followed by Yukos. Sibneft also led all the others by turning over its entire profit to its shareholders in dividends, which was an obvious sign that the shareholders suspected their fate was imminent. Surgutneftegas led the others in massive retention of its earnings, concealing the shareholder structure by which this was decided, and this made the indubitably rich pickings appear an alluring and easy mark.

The most revealing way of arraying the oil companies was by the volume of their debts. Yukos was evidently ahead, with more than $5 billion on the credit side of its balance sheet, followed by Surgutneftegas with $4.5 billion in the black. TNK led the debtors with more than $2.5 billion in the red, followed by Sibneft with $1.7 billion, LUKoil with $1.2 billion and Tatneft with $331 million.

By now, it is obvious that the two most indebted oil companies have fallen, but not before their shareholders grabbed a large, if hastily arranged, cash compensation – $3 billion from British Petroleum to the owners of TNK, and another $3 billion from Yukos to the owners of Sibneft. Surgutneftegas hasn’t exactly fallen so much as it has spent some of its cash pile to reinforce its management shareholders from someone else’s greed.

The terms of these deals also appear to have been cleared in advance with the Kremlin, possibly from President Vladimir Putin personally. This is nothing novel in Russian corporate practice; all corporate transactions of more than a handful of millions of dollars must be checked with the Kremlin, the Federal Security Service and other powerful government agencies to ensure that they won’t be reversed.

It is thus understandable that Russia’s oilmen have been worried by the Kremlin’s practices and are apprehensive about their survival chances. By referring to their tax position, and rejecting their bids for deregulation of their pipeline access, the Kremlin has also been reminding Khodorkovsky and his fellows that what they took so easily a short time ago might be taken from them with equal facility. That, plus the approaching parliamentary and presidential election campaigns, the rise of Communist support in the electorate and the risk of a sharp downturn in global commodity prices, starting with oil, is plenty to worry about.

Next to the billion-dollar parachutes, nothing evinces the Russian oilmen’s fearfulness as palpably as the amounts of corporate money they daily throw at the international and Russian media. The ari-spend potential of Russian oil, gas and metals is currently estimated at $100 million a year – in a marketplace that has been shrinking fast. In the Western business cycle, the timing is advantageous, because Western newspapers are desperate for the revenue and ready to accommodate the Russian oilmen’s urgent needs for positive personal promotion, and the benefit this confers on share values, borrowing costs, credit committee approvals. The Financial Times, for example, cannot get enough of TNK seller Mikhail Fridman – and Fridman’s Alfa Bank was one of the few advertisers in a Financial Times special report on Russia. The Economist Institute has twice invited one of the most-controversial oligarchs to deliver keynote addresses at its Russia conferences. All the so-called “journals of record” in London, New York and Washington have succumbed, and wire services as desperate as Reuters cannot resist. (Reuters, of course, denies all allegations that extraneous considerations are taken into account when it lavishes praise on monied interests.) Where the London Telegraph might have been tempted to employ a business analyst to judge the Yukos-Sibneft transaction, it reported instead that Yukos CEO Mikhail Khodorkovsky’s idol is Margaret Thatcher. Phew! What a reassurance that is, breathed the newspaper’s commercial director, in unison with his aging Tory readers.

Also according to the Telegraph, Khodorkovsky lives near Putin. That’s where the surfeit of Russian cash gives the game away. If Khodorkovsky, Roman Abramovich, Mikhail Fridman and the others were half as close to the Kremlin as they like to convey to their iconographers, they wouldn’t be spending so much of the corporate treasury on such nonsense, nor would they be taking so much for themselves and doing a runner.

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