MOSCOW, April 18 (Reuters) - Some of the world’s biggest fortunes were made and lost when the fall of the Soviet Union threw together a motley gang of brash young tycoons, hard-bitten oilmen and KGB veterans to scrabble for riches amidst the rubble of the Soviet oil industry.
“The iron curtain did not go down, Russians like to say, it went up,” says Georgetown professor Thane Gustafson in “Wheel of Fortune: The Battle for Oil and Power in Russia”, a drama of chance and personality which ultimately determined the fate of Russia’s oil.
On that stage Mikhail Khodorkovsky, a Communist youth leader trained as a scientist, created Russia’s first modern corporation, then lost his fortune and his freedom to a resurgent Russian state led by Vladimir Putin and his allies.
Gustafson, a Georgetown professor who also heads Russian and Caspian energy research at industry consultancy IHS Cera, spoke with Reuters about the personalities and circumstances which shaped the fate of Russia’s modern petrostate.
Q: How could chance play such a big part in the fate of such enormous wealth?
A: It has a lot to do with these things because things were so disrupted and strong personalities emerged. But even during the Putin years, because so much depends on the people in charge of various factions and interest groups, personality remains very fundamental.
Q: What did Putin have to work with when he became president upon Boris Yeltsin’s resignation in 1999? How has he managed with the hand he was dealt?
A: He was, politically speaking, almost naked. Usually when a politician reaches that high an office he has been in business for decades, has an assemblage of allies, a favour bank he can draw on, a sense of who his friends and enemies are.
Putin didn’t have any of those things. He had to form a team in very short order. He turned to people he had known and worked with, mainly from St Petersburg and largely from two groups of people - the former security people of St. Petersburg and the emerging business elite in St. Petersburg.
At an early stage he laid out a vision of state action for the rebuilding of Russian power and greatness in the world and first of all was the re-centralisation of power and authority.
As far as the energy sector is concerned, clearly energy would be at the centre of that thinking, simply because of the role that energy has always played as a source of revenue and a source of power.
Q: You knew Khodorkovsky as the CEO of the Yukos oil company (Russia’s biggest oil company), before he was jailed for tax fraud. What do you remember most about him?
A: Although he was highly educated, he had a degree in chemical engineering from a leading institute in Moscow, at the same time he was completely untutored in conventional business skills and was completely new to the outside world. A brilliant man, no doubt, but he was reinventing the wheel as he went along, and there were some things he got brilliantly wrong. One thing was that he thought that he would get much more help from the West in his political battles at home than he got, than he could possibly get.
To a considerable extent the ability of Khodorkovsky to take over Yukos was the result of the weakness of the Soviet-era oilman who was previously in charge. So that too was a factor of personality.
Q: What was the role of chance and personality in the transformation of (state oil company) Rosneft into a national champion with BP as a shareholder, from a repository for third rate oil assets which could not find a buyer?
A: In 1998 there was a (financial) crisis, the Asian flu. In the wake of that nobody was buying oil companies, least of all worthless oil companies.
Then along came from Sakhalin this completely unknown man, like the stranger riding out of the West in the Western movies, except this man rode out of the east. “Oil man from Sakhalin takes over worthless oil company,” that would have been the headline of the time.
But (former Rosneft CEO) Sergei Bogdanchikov was lucky and artful enough to make his case to Putin and to the Kremlin that they needed a national oil company, and to make himself the instrument of Putin’s recentralisation of the oil industry. (Reporting by Melissa Akin)