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Abkhazia-Azov: twice smaller but three times more expensive
30/08/2010 09:16
Gocha Gvaramia
Experts' Club

The Club of Experts follows activities of "Rosneft" from the first days of the interest of the Russian company towards occupied Abkhazia. Although from the first statements of Rosneft management on its "good" intentions, it became clear that the Kremlin decided to use the oil monopolist for political rather than economic purposes as we have written several times.

Despite the fact that at first we, having been accused of incompetence, were called provocateurs but the public of occupied Abkhazia gradually became convinced of the correctness of our position. And an article by Semen Pegov which was published in Sukhumi newspaper Nuzhnaya on August 17thconfirms and reiterates the main theses of all our publications on this topic.

The author was especially alerted by the fact that the president of Rosneft Sergei Bogdanchikov "became a frequent visitor" in the occupied Abkhazia. According to Pegov, "not so much economic as political status is attached to establishment of Rosneft in Abkhazia". This is evident even from the fact that participation of Rosneft in more serious projects in Russia, which are known to develop more serious and rich deposits, are paid much less attention with respect to information or publicity". The author finds it difficult to imagine that "Bogdanchikov is present at every transmission of mobile laboratory of quality control of petroleum products, opening of petrol station or inspection of a research vessel engaged in the study area at a particular shelf".

We should consider this more closely. Let's start with a mobile laboratory. As it is stated in the article, the mobile expert laboratory was presented to Abkhazians by Rosneft for quality control of petroleum products sold in the occupied territories. But the question arises: who will control activities of the laboratory? And how much biased the results of analysis will be?! Since it is clear that Rosneft plans to monopolize the entire market of petroleum products in independent Abkhazia. If a company tries to implement its plan by squeezing out local businessmen through manipulation of prices, then in Abkhazia this will be perceived as a violation of local customs and disrespect towards "hosts". And so, by juggling with results of analysis through the "donated" lab one can make bad publicity. As a result, Rosneft will be the sole supplier with the image of "high quality - low prices" while local businessmen "caught" for sale of "low quality" fuel will be forced to stop doing business. If this method is too long or not sufficiently effective, then appropriate order will come from Moscow and the Bagapsh "government" will get itself involved in shutting undesirable businesses. And to justify their actions, they will complain about terrible quality of products and present conclusions of the same donated laboratory, which would be particularly negative in this case. Indeed, "beware of Greeks, bearing gifts."

Now let's clarify what the research vessel "Deneb" which is occupied with research there since July is doing in the waters of Georgia, in particular offshore the occupied Abkhazia. On the one hand, "Deneb" works were commissioned by Limited Liability Corporation "RN-Shelf of Abkhazia" - a company that either is joint Russian-Abkhazian (if one believes Bagapsh) or 100% owned by Rosneft (if Bogdanchikov is to be believed). This company has the license for geological study of the bottom of Gudauta section and ordered "Deneb" to search off the coast of Abkhazia. The results of environmental monitoring will be used for planning of hydrocarbon exploration and assessment of damage that local fisheries may suffer from such works. So it is already known that the mere exploration works can cause considerable damage to flora and fauna of the coast. As Bogdanchikov himself said, all this is necessary in order "to compare what was and what is now"

To conduct ecological and seismological studies, Rosneft plans to spend a total of around half a billion rubles. However, neither Bogdanchikov nor head of the puppet regime Bagapsh mentioned what consequences will have forthcoming works of Rosneft for travel industry of Abkhazia, which is the main source of income of the "state" for the recognition of independence of which $ 50 million had to be paid to a tiny Pacific island.

The Club of Experts warned from the beginning that oil production is not the purpose of Rosneft as financially there is a risk of failure. Director of RN-Shelf Abkhazia Vadim Ivantsov let this information slip. on February 4th speaking at the hearings on environmental safety of the project in the Abkhazian "public chamber", he noted that the company is taking risk as oil may not be there at all.

Words of the company head can be cited to confirm this. "Prior to drilling on the Abkhazian shelf two wells will be drilled by Rosneft on the Black Sea shelf in the area of Novorossiysk. We are beginning experiments in the Black Sea not from Abkhazian shelf, but from that of Russia ", - said Sergey Bogdanchikov. This indicates that the Abkhazian shelf is not a priority for Rosneft. In this regard, we should remind that the first statement about possible oil production in Abkhazia was voiced by Sergei Bagapsh in 2006 and it was immediately commented by head of Lukoil Vagit Alekperov. Confirming the presence of "heavy oil" off the Abkhazian coast, he noted that because of non-profitability of production of this oil it presents "no interest and is not worth expanses that are necessary for its production."

Let us now consider a specific example. At the end of the 90s of the last century Lukoil and Rosneft established a joint venture company Priazovneft. In 2002, it requested the Ministry of Natural Resources for a license for geological study of the shelf of the Azov Sea. Lukoil and Rosneft developed a 5-year program for developing the site Azov shelf and it included seismic survey and drilling of three exploratory wells. The area of the license section is 5,430 square km and the cost of the entire program was estimated at 100 million dollars. In 2007, oil was found in the Azov Sea and development of oil pools is under way.

As we see, in the case of Abkhazia Lukoil refused to bear unnecessary costs, while his partner in the Azov oil production – Rosneft has still decided to engage in oil production on the Abkhazian shelf. But at the same time stipulating that it is ready to begin search drilling, if within the next 3-4 years seismic intelligence detects structures that will be considered prospective.

To make it clearer let us compare Azov works with Abkhazian ones. Representative of Rosneft and Director of RN-Shelf Abkhazia Vadim Ivantsov said that the company would spend about 10 billion rubles (about $ 350 million) at the first stage of exploration. And shelf area of Abkhazia where works will be carried out is 2,500 square km. In other words, oil exploration in Abkhazia on a section of 2,172 times less than in Azov costs Rosneft 3,5 times more than the Azov project. Then how many times more expensive cost of oil production itself will be in case of its detection? And at that Bogdanchikov and Bagapsh talk about oil prospects of Abkhazia? Then let them at least explain in overall numbers what are chances of Abkhazian oil not even be profitable, but at least cover its expanses considering the current low prices for "black gold". And that when Lukoil has called its unprofitable during the oil boom on international markets? It is clear that no one will present any calculations. Any attempt to justify this project from a commercial point of view, using specific calculations will be easily unmasked.

If looking for logic in the actions of Rosneft one should not look at commercial but at political reasons of its work in Abkhazia. Russian state company clearly performs its task set before it. Commercial non-profitability of the project is a payment for political gain. By involving and buying the top echelons of the puppet, but still proud regime of Sukhumi, Rosneft threw another bridle on Abkhazians, which will help keep them on a leash during the unpleasant for aborigines process of mastering of the occupied territories - a process that is already destroying the remnants of illusion about a kind of "independence".

As Semen Pegov mentions, "the arrival of Rosneft on the Abkhazian market makes not all local businessmen and owners of gas stations happy ... Many times it was said that it would be nice to support local entrepreneurs and local businesses, instead of giving this sector of national economy to Russian, but still a foreign company". And indeed, Rosneft is gaining full control of petroleum products. This lever will help to strain the situation at the right time by raising fuel prices (and hence that of a number of essential goods, agricultural products, etc.). That is, Moscow gets another major lever to manipulate with sentiments of the remaining population in Abkhazia and cause, if desired, a social crisis which is always easy to be used for political purposes. The dependence of the Abkhazians from Russia will become stronger when oil production would leave them without their major tourist income. As they say who pays the piper calls the tune! Puppets are puppets because they are led by puppeteers. Some people like it some do not. Abkhazians can avoid this fate only through their own efforts. In fairness it should be noted that some protest groups have already appeared in Abkhazia that are displeased with policy of obedience to Moscow. Perhaps these people will finally manage to awaken a desire in the Abkhaz society to soberly reflect on the past, assess a chosen path and answer the questions: who? what? why? and what to do? - and to give an adequate assessment to what is happening. 


 
 
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