Russia, Energy, and the New Cold War

Back in 1991 the de-construction of the Soviet Union was underway. Many of its state-owned oil and gas operations became the target of the largest oil companies in the United States. The expectations were that Russia's huge oil and gas reserves would be developed over the next few decades to meet worldwide rising energy demands. To some extent, that has happened since Russia became the world's second largest producer behind Saudi Arabia in 2003. 

Today, however, Vladimir Putin is redefining Russian energy geopolitics. As Russia continues to increase oil and gas production, he has become more determined to wrestle back the "prized" energy reserves that were given away so freely during the Yeltsin regime. While the United States was busy overtaking Iraq, Putin was in the process of seizing Yukos Oil Group. Thus, Russia began in earnest to resort to the old "Soviet-method" of state ownership. 

Recently, with Putin's formidable backing, Yukos has made a bid to acquire rival Sibneft. This oil company has about 20 billion barrels of oil and gas equivalent. A Yukos-Sibneft merger would create the second largest oil company in the world. Only ExxonMobil would have larger reserves. Several big-oil companies from the United States, including ChevronTexaco, were planning on investing in Yukos. These takeover plans have been stopped cold by the Kremlin. 

British Petroleum had partnered with Yukos and spent over $300 billion to develop the promising Proibskoye oil field in Siberia. After production had begun, BP was unlawfully kicked out by Russian oligarch Mikhail Khodorkovsky. This set up a confrontation between the billionaire Khodorkovsky and Putin. With NATO closing around him and the United States making a stand in the Middle East, Putin has turned Russia's interests from capitalism to rebuilding its strategic defenses.