Newspaper article The Christian Science Monitor

Kremlin Extends Grip on Oil

Newspaper article The Christian Science Monitor

Kremlin Extends Grip on Oil

Article excerpt

Mikhail Gutseriyev, a Russian oil billionaire who offended the Kremlin, is on the run, claiming he is the victim of political persecution. His private company Russneft, once the country's seventh-largest petroleum firm, has been hobbled by back tax charges and seized by a court. The tribulations of Mr. Gutseriyev, who has reportedly fled to London ahead of an international arrest warrant, bear more than a passing resemblance to the fate of Mikhail Khodorkovsky, whose arrest three years ago led to the effective renationalization of his Yukos oil empire. Since then, the state has moved from a tiny minority stake to direct control of 44 percent of Russia's oil production, according to a recent survey by Russia's Alpha Bank. Another wave of state takeovers is in the wind, experts say, and Russneft has been targeted for incorporation into a new mega-oil firm to be run by the Kremlin. But confusion surrounds the disposition of Russneft, which has reportedly been purchased by aluminum magnate Oleg Deripaska, a close ally of President Vladimir Putin, for some $6 billion. Last week, a Moscow court reaffirmed its seizure of the company, suggesting another contender for control may be waiting in the wings. Experts say that Mr. Putin's intention to step down early next year may have brought a Kremlin power struggle into the open. "Before, there was a precarious balance, but now it's a complete mess in the Kremlin," says Mikhail Krutikhin, an expert with Russian Energy, a Moscow consulting firm. "Putin seems to be a lame duck, and factions seem to be breaking away and acting on their own." Gutseriyev tried to buy Yukos assets Gutseriyev, whose Russneft was a small but fast-growing player that produced about 300,000 barrels daily, reportedly angered the Kremlin earlier this year by attempting to purchase Yukos assets that had been earmarked for state firms. In May, he was charged with "illegal business activity," and Russneft was saddled by Russia's tax police with $800 million in back tax charges. Experts say Gutseriyev, an ethnic Ingush, may have also displeased authorities by supporting politicians opposed to ex-KGB general Murat Zyazikov, the Kremlin appointee who leads the troubled Caucasus republic of Ingushetia. In late August, Gutseriyev's 21-year-old son, Chinghiz, was killed in a mysterious car crash and the tycoon was last seen at the boy's funeral in Baku, Azerbaijan. Last week, a Moscow court issued an international arrest warrant, saying Gutseriyev had violated a pledge not to leave Russia. "Gutseriyev showed he would not be part of the system, and what happened to him is part of a larger process," says Olga Kyrshtanovskaya, head of Elite Studies at the official Russian Institute of Sociology. "People who are intractable, or do not play by the rules, invite a nervous reaction from the authorities. …

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