Yukos Turmoil Throws Siberian Pipeline Into
Doubt
Russian President Putin's arrest of Yukos CEO Mikhail
Khodorkovsky has cast a long shadow over China's plans
for a pipeline through Siberia to China. The pipeline
to China was supported by the Chinese government, which
is seeking to expand oil imports from overseas for an
energy-hungry China.
China's economic growth has fueled demand for oil, especially
because of heavy consumer purchases of cars. Earlier in
the year, China signed a 25-year, $150 billion agreement
with Yukos to supply oil to China, which was led by Mikhail
Khodorkovsky. Now Khodorkovsky is in jail, and facing
trial for tax evasion. Khodorkovsky was known in Russia
as one of the "new oligarchs", and had been
openly critical of President Putin.
Khodorkovsky had a reputation as an aggressive deal-maker,
and at the time of his arrest, was in negotiations with
ExxonMobil and ChevronTexaco about a multi-billion dollar
stake in the company. But yesterday, the Russian government
moved to freeze a 44 percent block of shares in the company.
Western oil companies have expressed an interest in Russian
oil because of the political instability in the Middle
East, and general hostility, in particular, to American
interests.
China's three oil companies, PetroChina, Sinopec and
CNOOC, have sought to quietly make deals to secure oil
contracts to insure China's future oil supplies. The most
immediate questions are whether this arrest will have
a long-term effect on management decisions made by Khodorkovsky?
Will the Russian government honor contracts made under
his watch? Or will they want to install their own people,
and effectively bring the company under government control?
And how will they earn back the trust of the foreign business
community, including China's?
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