It came out this Monday that the Russian government's natural gas monopoly, Gazprom, almost made a bid for Dow Jones before Rupert Murdoch snapped it up. If the Kremlin wants to pay $5 billion for a contrarian financial publisher, may I suggest this one?
Oh, that Vlad... It was just a week ago that I realized why so many French-language headlines told of Muscovites protesting against gravy fries. As it turns out, "Poutine" is how the French spell the Russian president's surname, landing on the same orthography as the artery-clogging national dish of French Canadians. I don't know their stance on Quebecois fare, but Russian pro-democracy protesters aren't bound for any radical re-evaluation of their attitudes towards their president any time soon.
On Wednesday, Putin announced the dissolution of the government (which in parliamentary countries is tantamount to the cabinet, not the entire establishment). At the top of the news was Putin's decision to award Viktor Zubkov with his official endorsement for Prime Minister, pending parliamentary approval.
Zubkov surged ahead of two long-time favorites, former Defense Minister Sergei Ivanov and Gazprom chairman Dmitry Medvedev, towards the premiership, which in Putin's own case foreshadowed his ascent to the presidency.
Putin will be done for a while as president once March 2008 rolls around, as the floppy constitution bars him from three consecutive terms. He will, however, be able to stand for the office again in 2012--that is unless he makes a Chavez-esque push to get parliament to change the constitution and make him ruler for however long he pleases.
Stanislav Belkovksy, a prominent opposition activist, told Ekho Moskvy radio that Putin "again showed that he's a master of disinformation" when he nudged Zubkov to the front of the line.
If there's one place where disinformation is a virtue, it's today's world of energy. Crude oil hit 80 bucks a barrel today (kudos to T. Boone Pickens, the 79 year-old oil oracle who just a few weeks ago called for $80 before his 80th birthday, which is next May).
The world's favorite and simultaneously most-feared cartel, OPEC, threw everyone a crude curveball this week. Supplies were deemed sufficient not only according to stalwarts like Saudi Arabia but also according to Libya, whose oil industry is only in the beginnings of a boom after renouncing terror, and whom it might benefit to say, "the world needs a little more Tripoli Tea."
Then on Tuesday, September 11, OPEC announced a 500,000 bbl/d output hike to begin November 1. This will likely have downward pressure on NYMEX crude futures in the coming months, but there is always another dimension to petropolitics than just what the supply and demand curves do to price charts.
The Saudis want to string out the western world and Asia's new budding junkies, China and India, for as long as possible. The House of Saud is also known for its glad-handing in Washington and, even on the anniversary of the World Trade Center and Pentagon attacks that were led by Saudi nationals, the royal family is comfortable manipulating not only price outlook but overall sentiment in energy markets.
Putin is also an expert at playing the hydrocarbon card. He's arrested oligarchs who won super-cheap oil and gas contracts from predecessor Boris Yeltsin after the USSR fell, merging their fossil fuel assets into national champions Gazprom and Rosneft, its oil equivalent. He also used creative contract revision and even environmental citations to wrest control of two major Siberian exploration projects away from Shell and BP.
Now, he's cleverly moved Medvedev, the public face of Gazprom, out of the queue for the government's head, placing in his stead the bespectacled and relatively unknown Zubkov, an official whose primary task to this point has been to combat money laundering.
All while Russia resumes long-range bomber flights for the first time since the Cold War and holds joint military exercises with the Shanghai Cooperation Organization in hopes of establishing a counterbalance to NATO.
No matter the inner workings of Moscow politics, we have little to do but observe. Our European allies such as Great Britain are even deeper in Russia's pocket, as Europe needs Siberian natural gas to keep its people from freezing to death. Shell and BP have little to do but shake their fists at Gazprom and Rosneft, and renegotiate much less favorable contracts.
Gazprom is even going after new natural gas properties offshore Libya, where my Orbus Investor subscribers and I have already played that country's resurgent oil and gas industry for triple-digit gains.
In the meantime I guess I'll just wait for a Russian bid to buy my column, at which point my tone will probably change.
Regards,
Sam Hopkins
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