WASHINGTON -- With Russian voters poised to say "nyet" to a
Communist as their next president, few observers are more relieved
than those in the U.S. oil industry.
Giants such as Exxon, Marathon and Conoco had feared that
Communist Gennady Zyuganov would spoil plans to invest billions in
Russia's faltering oil industry if he won the presidency.
But the jitters aren't over yet.
In a nation as new to democracy as Russia, President Boris
Yeltsin's re-election isn't exactly a cinch.
And if he wins by a narrow margin in Wednesday's runoff election,
Yeltsin's lack of a clear mandate could further muddle an already
ambiguous policy on allowing foreign investment to reinvigorate
Russia's exploration and development programs.
"Yeltsin has always had two faces, and the question is, which face
would he show and how long would he show it," said Matt Sagers,
energy services director for the Planeco consultancy in Washington,
One face allows more foreign deals and democracy, Sagers said.
The other is more akin to the kind of closed, command economy Russia
has had in the past.
Some enormous deals are at stake. Russia has significant oil
reserves but lacks the technology or investment capital to unlock
"There is an enormous backlog" of potential deals, said Gordon
Feller, publisher of Russian Business News in San Rafael, Calif. "I
could count 20 off the top of my head that are big."
But political uncertainty has put deal-making on hold for the past
six months. About the only activity, experts say, has been in areas
where contracts required pushing ahead.
Most negotiations have come to a halt until companies can
determine whether Russia will continue to be politically stable and
welcome foreign investment.
"Clearly those projects are waiting for a time when there is more
political certainty," said Jim Langdon, a lawyer specializing in
international deals for the legal firm Akin, Gump, Strauss, Hauer &
Feld in Washington.
The holdup is partially legislative. The Russian government has
been slowly allowing its "production sharing agreement" to wind
through the legislative process. The law, critical for determining
how oil riches will be divided, was enacted in January 1995. But
foreign oil companies have been pressing for changes to address
questions about taxation and other issues.
Some major projects are moving forward, however. Projects in the
Sakhalin Islands area have attracted the most attention. …