ASSESSMENTS

Russian Rivalries: A Tale of Two Energy Firms

Sep 7, 2017 | 12:26 GMT

Russian President Vladimir Putin meets with Igor Sechin, the CEO of oil giant Rosneft, on May 17, 2017.

(YURI KADOBNOV/AFP/Getty Images)

Highlights

As overall energy revenue in Russia has decreased in recent years, oil giant Rosneft has aggressively attempted to expand its influence.
Rosneft hopes to translate its power into major changes in the energy landscape, such as ending rival Gazprom's monopoly over piped natural gas exports.
Rosneft's increasing influence has allowed its leader, Igor Sechin, to expand beyond energy politics into conflicts with his personal rivals, which may draw a response from Russian President Vladimir Putin.
Should Putin decide to take down Sechin, the consequences would ripple beyond the energy sector and into the larger political environs of Russia.

Gazprom has long been the Kremlin's favored energy partner, holding a monopoly over Russia's piped natural gas exports. Gazprom's stranglehold on natural gas exports meant the Kremlin could use it as a tool in its relationships with former Soviet states, Europe and Turkey. But lower global natural gas prices, as well as a string of diversification projects in Europe, Eurasia and the Middle East, have curbed Gazprom's ability to influence affairs in those regions, which in turn has weakened its position with the Kremlin. In Gazprom's struggles, Rosneft has spied an opportunity. Now that its rival is weaker, the firm has started to aggressively grab new assets: In October 2016, Rosneft closed a deal to take over the country's sixth largest oil firm, Bashneft, even after Putin explicitly warned against the takeover with a rare public threat. Rosneft won out in the end, agreeing to let the Kremlin privatize a large...

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