WHEEL OF FORTUNE

WHEEL OF FORTUNE

Thane Gustafson
Copyright Date: 2012
Published by: Harvard University Press
Pages: 660
https://www.jstor.org/stable/j.ctt2jbwxh
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  • Book Info
    WHEEL OF FORTUNE
    Book Description:

    The world’s largest exporter of oil is facing mounting problems that could send shock waves through every major economy. Gustafson provides an authoritative account of the Russian oil industry from the last years of communism to its uncertain future. The stakes extend beyond global energy security to include the threat of a destabilized Russia.

    eISBN: 978-0-674-06801-8
    Subjects: History, Political Science, Business

Table of Contents

  1. Front Matter
    (pp. [i]-[vi])
  2. Table of Contents
    (pp. [vii]-[ix])
  3. Introduction
    (pp. 1-29)

    This is a book about Russian oil and the making of the new Russia. In December 1991, after seven decades in power, the Soviet Union vanished into history. One of the greatest collapses of modern times was then followed by one of the greatest depressions. The Soviet oil industry, which had been one of the main catalysts of the crash, became one of its chief victims. Soviet oil production, which had led the world in the 1980s, dropped by nearly half through the 1990s, as the oil industry fell apart. One of the most vivid symbols of the Soviet fall...

  4. chapter 1 The Breakup: The Soviet Oil Industry Disintegrates
    (pp. 30-62)

    Today the veteran “oil generals” who ran the Soviet oil industry look back on their past as though it all happened on a remote planet. Valerii Graifer, now chairman of the board of LUKoil, Russia’s largest private oil company, is today a white-haired gentleman in his eighties. His modest and courtly manner gives little hint of the power he once wielded. In the second half of the 1980s, the last years of the Soviet Union, Graifer, as head of the oil ministry’s main administration in West Siberia, controlled over 400 million tons per year (8 million barrels per day) of...

  5. chapter 2 Riding Chaos: The Battle for Ownership, Money, and Power
    (pp. 63-97)

    Old buildings have their own stories to tell. In the bleak winter of 1991–1992 the newly created Russian Ministry of Fuel and Power moved into the drafty headquarters of the former Soviet Ministry of Electrification at Number 7 Kitaigorodskii Proezd, near Red Square. For a time the old building had no security at all. Visitors entered as they pleased through the creaky swinging doors, brushed past the pensioners posted to check documents that no one bothered to present, then walked up the dusty and chipped marble steps and down dimly lighted hallways, the walls still festooned with fading posters...

  6. chapter 3 The Birth of the Russian Majors: LUKoil, Surgutneftegaz, and Yukos
    (pp. 98-144)

    Getting gas for your car in Russia used to be a test of character. Gas stations were few and far between, generally located on the outskirts of town. Drivers who managed to find one were rewarded with low-octane gasoline and Sovietstyle service. But suddenly, around the mid-1990s, Russians began to notice amazing changes. Shiny, brightly lit, brand-new service stations started popping up like mushrooms at local intersections, offering not only high-octane gasoline of dependable quality but an unheard-of innovation—an avtomoika, an automatic car wash. The new stations even featured convenience stores with all the benefits of civilization, such as...

  7. chapter 4 Worlds in Collision: The Foreigners Arrive in Russia
    (pp. 145-184)

    Early on a winter morning in Calgary in 1995, I joined a planeload of Canadian drillers on their way to north Russia. Our chartered Boeing 737 had never been built to fly so far—its main virtue was that it was cheap—and it made five refueling stops as it lumbered its way across the Canadian north and over Iceland, landing in Murmansk on the Russian Kola Peninsula. There we cleared passport control and customs before flying the last leg to our destination, Usinsk, an isolated oil town in the Russian northwest, where we finally disembarked, twenty-four hours after takeoff....

  8. chapter 5 The Russian “Oil Miracle”: 1999–2004
    (pp. 185-230)

    “Russia is down the tubes,” concluded one guest gloomily, and no one disagreed. It was a despondent group that gazed into their dinner plates on the seventh floor of the State Department, as Secretary of State Madeleine Albright hosted a group of specialists to discuss the state of Russia. The revival of relations with Russia had been one of the major foreign policy projects of the Clinton administration, and now it looked all for nought. On August 17, 1998, the Russian government had defaulted on $40 billion of foreign debt and devalued the ruble fourfold. Overnight the country had been...

  9. chapter 6 The Brothers from Saint Petersburg: The Origins of Putin’s State Capitalism
    (pp. 231-271)

    Moscow and Saint Petersburg have always been rivals. Ever since Tsar Peter the Great founded his northern capital in the spring of 1703, cutting a cross in the barren peat of the Neva River delta, Muscovites have derided it as an upstart, an administrative city with imperial pretensions. Saint Petersburgers, for their part, have long dismissed Moscow as a crass merchant town. The two cities compete for the soul of the country, each rising and falling in a struggle that has lasted 300 years. But in the 2000s, as the rivalry entered its fourth century, the elites of Saint Petersburg...

  10. chapter 7 “Chudo” Meets “Russian Bear”: The Yukos Affair
    (pp. 272-318)

    The season’s first big snow swirled across Siberia. Shortly before dawn, a white Tupolev 134 with no markings cut through the dark frigid morning and touched down at Tolmachevo Airport in Novosibirsk to refuel. The plane’s sole passenger was the CEO of Yukos, Mikhail Khodorkovsky. At first, all seemed normal. But as the plane taxied to a stop, Khodorkovsky looked out the cabin window and saw a party of armed troops. In seconds the plane was surrounded. The soldiers, a unit of the FSB’s elite Alfa antiterrorist brigade, stormed aboard. Khodorkovsky was led away, in handcuffs and with a hood...

  11. chapter 8 Russia’s Accidental Oil Champion: The Rise of Rosneft
    (pp. 319-358)

    National oil companies (NOCs) are the dominant species in today’s oil world. Not long ago, this would have been considered surprising. As recently as 1970, privately owned international oil companies (IOCs) controlled 85 percent of the world’s proven oil reserves. Today they control only 10 percent, while the share of the NOCs has increased to over three-quarters. Fourteen of the top twenty oil companies in the world are NOCs, and they are gaining steadily, in their size, their reach, and their ambitions.

    Russia in the 1990s went the other way, toward a radical privatization, joining a handful of market economies...

  12. chapter 9 Krizis: The Rude Awakening of 2008–2009 and the Russian Oil-Tax Dilemma
    (pp. 359-381)

    Every year, at the summer solstice, the cream of Russia’s businessmen and politicians, joined by hundreds of high-placed foreign guests, gathers at the Economic Forum in Saint Petersburg for two days of high-level panels, meetings, and garden parties. It is the place to meet and be met, to do deals, to show off Russia’s achievements, and, for the Pitertsy, to celebrate the brief summer by the oblique light of the midnight sun.

    At the June 2008 edition of the Forum, there was much to celebrate. Russia’s economy had grown by 7 percent per year since 1999, nearly doubling in less...

  13. chapter 10 Strong Thumbs, Weak Fingers: How the State Regulates the Oil Industry
    (pp. 382-410)

    If the tax system has a reasonably clear primary objective—to produce revenue for the state—the same cannot be said of the other main instrument for state control of the oil industry, the regulatory system. Here the picture looks quite different. In place of one central objective, there is a multitude, which shift over time, with no clear ranking among them. Instead of one principal agency in charge, there are many, which compete with one another for turf and influence. Instead of strong ministers with clear authority, there are weak ones, who preside over divided agencies. The rules they...

  14. chapter 11 The Half-Raised Curtain: The Foreign Companies as Agents of Change
    (pp. 411-448)

    An old-style Soviet neftianik awakes after a twenty-year sleep. He wanders open-mouthed through the corporate headquarters of one of today’s Russian oil giants, gazing in wonder at the gleaming new high-rise office buildings and the expansive boardrooms, the high-tech data centers, and the space-age trading rooms. He concludes that communism has finally arrived. Or—Marx forbid—the capitalist West has triumphed after all. More likely something between the two: Any Russian of a certain age would be irresistibly reminded of the old Soviet-era anekdot about the day Leonid Brezhnev proudly shows his mother around the Communist Party Politburo’s swank new...

  15. chapter 12 Three Colors of Oil: The Coming Crisis of Oil Rents
    (pp. 449-479)

    “Sixty percent of our reserves have already been produced.” Vladimir Bogdanov, the CEO of Surgutneft egaz, is briefing president Dmitri Medvedev and a highpowered group from Moscow. Outside, it is Siberian spring, the temperature still well below zero. Bogdanov’s voice grows more urgent. “Three-quarters of our oil comes from low-grade reserves. Ninety percent of what we produce is water. Our costs are rising twice as fast as world oil prices.”¹ Bogdanov is talking about his own company, but his words have a larger import. The news is bad. West Siberia, the oil province that still produces two-thirds of Russian oil,...

  16. chapter 13 Looking Ahead: Oil and the Future of Russia; Russia and the Future of Oil
    (pp. 480-502)

    As they look back over the last twenty years since the Soviet breakup, the veterans, people like Vladimir Bogdanov of Surgutneftegaz, know better than anyone how much has turned on chance and personality, and how easily the outcomes could have been different. What if Bogdanov had not managed to close the airport to Surgut and prevent his company from being auctioned off to a financial oligarch during the “Sale of the Century” in the mid-1990s? What if he had lost his battle for the Kirishi refinery and not formed early alliances with the then obscure Vladimir Putin and Gennadii Timchenko?...

  17. Notes
    (pp. 503-614)
  18. Bibliography
    (pp. 615-636)
  19. Acknowledgments
    (pp. 637-640)
  20. Index
    (pp. 641-662)