USA (212) 688-8868
Select Page

Article written by Grzegorz Kuczynski, and translated from an article in the polish press :  Genoil mentioned below under paragraphs titled “Possible Scenario’s” and “Rosneft Mountain.”

Business oil is one of the main flashpoints in the Chechen-Russian relations since the early 90s has not changed the pacification of the republic – still struggle for control of Chechen hydrocarbons. Just it revealed the delay in the transfer of oil infrastructure to local authorities, despite the fact that Ramzan Kadyrov has received such a promise from Vladimir Putin over a year ago. Translation can be only one: the veto Igor Sechin, who recently grown, and actually returned to the position of number two in Russia. For several years, a Rosneft controls the Chechen oil industry. I do not intend to give up easily. The more that Sechin has allies in the federal institutions of power, a few years of ongoing guerrilla war with Kadyrov – says Grzegorz Kuczynski, author

Wealth Chechnya

Back in the seventies of the last century in Chechnya mined approximately thirty million tons of oil per year. In 1990. However, production fell to a mere four tons. The main reason: not invested in the search for new deposits. At a time when the Soviet Union fell, proved reserves of raw materials in the republic was estimated at 50 million tons. Twenty years later, after the two Chechen wars, then republican minister of industry and energy Alchazur Abdulkerimow talked only about 20 million tons. But while no one denies that in Chechnya may still be quite large deposits of oil. The problem is that Moscow has long does not depend on the development of this industry in the republic. Besides, the authorities of the independent Chechen Republic of Ichkeria in the nineties had a different concept of the supply of local refineries in the raw material. In October 1997, after the decision to build an oil pipeline Grozny-Tbilisi, the then President Aslan Maskhadov decree dissolved the management Chechen oil sector, oriented on cooperation with Russia, the company Junko (Russian. South Oil Company). The oil is used the players from Moscow. The then president of Rosneft Sergei Bogdanchikov immediately turned to the Federal Ministry of Mineral Resources for temporary licenses for the use of oil wells in Chechnya. Five years later, after the occupation of the republic by Russian troops during the so-called. the second Chechen war, 20 February 2002. Rosneft has already received a permanent license for the exploitation of hydrocarbons in Chechnya.

Currently in the republic are two companies belonging to Rosneft RN-Czeczennieftieprodukt and Groznieftiegaz. The latter manages the lion’s part of the production infrastructure of the state oil company Czeczennieftiechimprom (CNCP).President of CNCP since the creation of the company in April 2011. Chożbaudi is Alwijew, considered human Sechin.Czeczennieftiechimprom belongs to the federal agencies of state property (Rosgosimuszczestwo), and its assets in 2015. Was estimated at 80 million dollars. CNCP to be more than one thousand one hundred oil and gas wells, land plots with a total area of ​​11.6 thousand. ha, two refineries, the company repair, equipment for extraction of petroleum, four Naftobazy and over 500 km of pipelines.

The Emphasis On Decentralization

This is a very tasty morsel, it is no wonder that for years Kadyrov pushing for Moscow to control Czeczennieftiechimpromem give the authorities of the republic. He argues that the current estate manager CNCP does not fully exploit the potential of the company. Recently he came to the complaint that the company Sechin did not want to lease land CNCP, in which the authorities in Grozny want to build plant for the production of lithium-ion batteries. The agreement with South Korean company Kokam was signed in December 2014. And provides 800 new jobs at the factory built by 2018. In the village of Taszkała in the region staropromysłowskim Grozny (total investment would exceed 6.5 billion rubles). Kadyrov also wants to resume mining in parts of shafts CNCP currently inactive. It was not the thought of the Chechen government was the decision of the federal government, by the end of 2016. privatize the CNCP. Kadyrov has launched his personal contacts in the Kremlin to prevent this scenario. This coincided in time with the escalation of the conflict with Ramzan federal siloviki. Finally he came out unscathed Chechen president, confirming its exclusive right to the use of force on the territory of the republic (an important element of intrigue was the murder of Boris Nemtsov).And at the end of December 2015 also we managed to finally convince the Russian President in the Chechen oil. Putin gave the green light to the federal government to pass Czeczennieftiechimprom Republican government in Grozny.

But not everything went so fast, if he wanted to Kadyrov. It was not until the beginning of February 2016. At the conference at the Federal Ministry of Economic Affairs agreed that the establishment of a joint working group, which will determine the division of assets CNCP. Still later, as late as June – six months after the decision of Putin – Prime Minister Dmitry Medvedev CNCP removed from the list of state-owned companies to be privatized before the end of 2016 years.Meanwhile, the formal owner of the CNCP, the agency Rosgosimuszczestwo could not get along with Grozny on the division of assets. In June last year, “Kommersant” reported that Rosgosimuszczestwo proposed that CNCP assets currently managed by Groznieftiegaz became the property of Rosneft, while the rest went into the hands of kadyrowców.This variant, however, is unacceptable to Ramzan, after all Groznieftiegaz manages the best and the most profitable parts of the Chechen oil sector.

Possible Scenarios

In August, two alternative proposals left alone Rosneft. The first scenario assumes that the company will take over all assets other than land CNCP anticipated for the construction of a factory of lithium-ion batteries. The second proposal provides for the complete withdrawal from Chechnya Rosneft, putting assets not controlled by Groznieftiegaz and sale of such controlled by the company at the market price a willing investor, whether it would be a Chechen government, or a foreign entity. In late September, Russian media reported that the Federal Ministry of Economic Affairs is in favor of the second option, and formally asked the government of Chechnya, whether he wants to buy Groznieftiegaz and other assets of Rosneft in the republic. The agreement would be concluded by the end of the year. What is Kadyrov? It seems, however, that he would rather get CNCP for free: in December 2016. Federal Minister. North Caucasus Lev Kuznetsov told reporters that he still has not been established details of transfer transactions (sales) Czeczennieftiechimpromu. To hard attitude side Chechen sharper also played Sechin: Rosneft hung indefinitely a plan to build a refinery in Chechnya with an annual capacity of one million tons (oil production in the republic is now less than half a million tonnes per year).The agreement on the construction was signed by the company Sechin with the government of Chechnya even in 2010. Rosneft translators now postponing the construction of a decrease in demand for oil – as decided by Moscow in November last year Decision on reduction of extraction (after I just decided OPEC).

Kadyrov has not made weapons. We are looking for various ways to achieve the goal. One of them is playing the card supposedly an attractive foreign investment in the expansion of the Chechen oil sector. It has to persuade Moscow to give CNCP. April 7, 2016 r. In Moscow registered a private company Groznieft ‘, the aim of which action is to be attracting investments to Chechnya. 70 percent. the company belongs to Ahmed Elbijewa 30 percent. Larysa to Gusak. Her husband, Andrei, head of the supervisory board of the company, was very active figure in the Chechen oil business at the beginning of the previous decade. In the middle of 2000. When in Chechnya took place even combat operations, Gusak became head of the South Oil Company (Junko), the company closed down three years earlier by President Maskhadov, now reconstituted by the Chechen authorities loyal to Moscow and renamed quickly Groznieft ‘. The company was to be an alternative for Rosneft, which began to use the Chechen oil and gas assets after the majority of the republic’s territory was occupied by federal forces. For the entire initiative steel Russian competitors Rosneft – Gusak was regarded then as a man holding Renova, owned by Victor Vekselberg, one of the key shareholders of Tyumen Oil Company (TNK).

Rosneft Mountain

Competition for the right to extract hydrocarbons Chechen settled, however – as mentioned above – in favor of Rosneft, which in 2002. Received the necessary licenses. The contemporary Groznieft ‘was abolished – the name, perhaps not accidentally – came back just now. In November of 2016. He announced that it has signed an agreement with the Canadian company Genoil letter of intent on the “development of construction projects and energy in Russia and Chechnya.” Gusak told the media that the first draft mentioned in the letter of intent will focus on restoring oil production in Chechnya, and further provides for the construction of a refinery with an annual production capacity of 3-6 million tons of oil. So it’s clearly a reflection balls on the side of Rosneft, which froze the project to build a refinery in Chechnya.Genoil plans to enter the Chechen business in consortium with Chinese entities, which would provide financing – estimated at up to $ 15 billion. Petroleum products would be exported to China.

The whole plan from the beginning raises enormous doubts. Firstly, the construction of the refinery will make sense only after increasing the extraction in Chechnya – now it is less than half a million tonnes per year. The situation is complicated by widely divergent estimates of oil reserves in Chechnya, from a little over 8 million tonnes to 70 million tonnes. Secondly, the letter of intent Grozniefti and Genoilu assumes that “the Russian government and the Ministry of Fuel and Energy of the Russian Federation, as well as other related ministries and departments will provide full support for this project to ensure its implementation on time. The project will be entered into a commercial agreement, pact or agreement on cooperation between Russia and China. “ Very ambitious, the question whether such will be on the side of both Moscow and Beijing. Third and fourth, doubts rise recorded in the project a huge sum, and besides, the implementation of the agreement must mean that Rosneft eventually sell / give Grozniefti rights to oil extraction in Chechnya, now belonging to Groznieftiegazu. Fifth, hardly Genoil a significant player. It was established in 1996. Company is headquartered in Calgary. It has modern technologies, but funding has not. Given the influence, the Canadian company may include more entities of medium size. Earlier, in 2004., Genoil invest – with a poor result – in oil production in the Komi, along with Lukoil. Perhaps Kadyrov decided that sufficient advantage will be the fact that the president Genoilu, David Lifschultz is a former business partner of Donald Trump?

Kadyrov is not giving up

What is certain is that this is just a bargaining chip in the hands of Kadyrov. He wants in this way to persuade Moscow to finally pass CNCP government in Grozny – showing that it is a better deal for the development of the oil industry in Chechnya than Rosneft. Chechen authorities not once Groznieftiegaz criticized for the lack of investment in geological research. Kadyrov publicly criticized and Groznieftiegaz same and Rosneft. This second most for the delay in the promised construction of the refinery. The ownership CNCP is, according to Kadyrov, an example of “parasitic activities,” federal officials on the Chechen economy. Interesting, that immediately after the arrest of Alexei Uljukajewa Kadyrov said that Economy Minister expected him bribes for providing CNCP Chechnya. Uljukajewa “beheaded” Sechin, but it is the head of Rosneft is the main rival of Kadyrov in the Chechen struggle for oil assets. Interestingly, oil from Chechnya is only 0.23 percent. the entire mining Rosneft, so it is difficult to discern the economic theme in politics Sechin ws. CNCP. In addition, putting the oil authorities in Grozny it could be used as an argument for reducing federal grant for Chechnya.But in this case, these policies. Clearly reinforced recently the president of Rosneft does not intend in any way give way to the Chechen pet Putin. The decision fate Czeczennieftiechimpromu answer therefore to the question about the current balance of power in the Kremlin.