By utilizing its giant oil companies to gain access to oil and gas in the producing countries, either through joint ventures, or direct cash and loans, the influence of Russia is respected and admired.
It began last year when OPEC cut crude production by strictly adhering to the terms of agreement and monitoring its application.
The oil markets were surprised to see Russian commitment and full cooperation in terms of cutting the oil production in cooperation with OPEC. Russia is now seen as a leading oil producing nation for further extension of the agreement until the end of next year. Without its full cooperation oil couldn’t have reached above $60 a barrel today.
Now the Russian oil policy is being tied to forming strategic cooperation, investments going deep into providing their technical assistance and gaining share of the deep reserve of oil and gas with largest reserves.
Russia’s recent cooperation including the biggest oil producers in the Arabian Gulf, with Saudi Arabia, Iraq and Iran, as well as both in oil and gas, it is providing financial assistance to Iran worth of $30 billion, against purchasing Iranian crude oil and technical assistance which is done by involving its biggest oil company Roseneft and Promgas, which has the largest gas reserve in the world. The two companies move in tandem under the watchful eyes of the Russian government and direct supervision.
The expansion of Russian oil diplomacy included buying the share of Venezuela’s in US refining business with its 4 percent share of the US market along with service gas stations in the Southern States.
It will provide Venezuela $10 billion against its US assets as collateral for future payments, knowing well that the country’s total debt runs over $150 billion. Again, this is the price it has to pay to gain access to oil rich countries in the Middle East and North Africa, Egypt, and other countries including Cuba.
Some of the countries are in desperate need of help and assistance from Russia, while its investments in the Gulf and the Middle East is more of direct foreign policy to gain ground and to be a strong political power.
It may be costly investments and if ever recovers its monies; this will be breakeven against its cooperation in other countries which are rich in oil and gas.
It is the fact that the Russian cooperation with OPEC was breakpoint in satisfying OPEC needs, of which both have gained more than $20 per barrel in revenues over the last year, while it has managed to impose itself as a major oil power player at the right time.
By Kamel Al-Harami – Independent Oil Analyst