Academic journal article Demokratizatsiya

Russia and the United States: No Longer Rivals, Not Yet Partners

Academic journal article Demokratizatsiya

Russia and the United States: No Longer Rivals, Not Yet Partners

Article excerpt

At the start of the twentieth century, consumer oil supplies were almost entirely controlled by Russia and the United States. Today, the market is much less monopolistic: there are major oil export centers in the Middle East, North and West Africa, South America, and the North Sea. But Russia remains a leading oil supplier to the global market. In 2006, it became the world leader in deliveries, surpassing Saudi Arabia. The United States, on the other hand, has, over the past century, become the world's largest oil importer. Half of the oil used in the United States is brought in from other countries.

Despite the changes that have taken place, the former rivals have not become strategic partners. In looking for alternatives to Persian Gulf oil supplies, the United States is inclined to West Africa. Seeking to reduce its dependence on the European market, Russia is increasing its cooperation with the countries of the Asia-Pacific region.

Although they need each other, Russia and the United States are nonetheless moving in opposite directions. This is regrettable, particularly if you consider that the world is on the threshold of creating a global natural gas market.

Beginning of the Twentieth Century: The Rise and Fall of Baku Oil

For Russia, the beginning of the twentieth century was marked by the active development of the Baku oil industry. In 1901 the area produced 220,000 barrels per day (bpd), more than half of the world's output. As in the United States, the main role in the development of the Russian oil production sector was played by private capital.

However, in the United States this capital came from within the country. The founder of the famous Standard Oil Trust was John Davison Rockefeller, the son of a doctor from New York. Investors in Russian oil production were not only domestic companies (the Nobel Brothers Petroleum Company and the Russian General Oil Corporation) but also French (the Rothschilds) and later Anglo-Dutch (Royal Dutch/Shell).

The 1917 revolution and subsequent nationalization changed the direction of development of the Russian oil industry.

For American and European companies, the 1920s and 1930s were a period of active international expansion. In 1928 the managers of Royal Dutch/Shell, Standard Oil of New Jersey (the future Exxon), and the Anglo-Persian Oil Company (the future BP) reached an agreement on joint measures to explore and develop deposits in the world's main oil-producing regions. They were later joined by Standard Oil of California (the future Chevron), Standard Oil of New York (the future Mobil), Texas Company (the future Texaco), and Gulf Oil. The informal association came to be called the "Seven Sisters." The consortium's coordinated actions allowed it to monopolize oil production and supply on the world markets for several decades.

At the same time, the Soviet Union was making efforts to restore production-which had decreased considerably because of the civil war and the nationalization of the oil industry-in the Baku region. This was achieved only on the eve of World War II. However, the successes were undermined by the striving of Hitler's Germany to obtain control over the Baku oil fields. Production capacity had to be evacuated to the central regions of the country, and as a result, Baku's oil production once again fell to 1901 levels.

The 1950s and 1960s: The USSR as the New Player on the World Market

The postwar years were marked by the increasing influence of the oil-producing states on the development of the global oil industry. The understanding that Enrico Mattei, head of the Italian concern ENI, reached with the Iranian authorities played an important role in this development. Attempting to break the monopoly of the Seven Sisters, Mattei offered new, more profitable cooperation terms to the host side. For the first time, in 1957, income was split between the investor (ENI) and the host country (Iran) in a 25:75 ratio (the "Mattei Formula"). …

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