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Russian Government Oil Takeover Continues

Call it PetroKremlin. To date, Moscow has effectively renationalized almost a third of the formerly private oil-and-gas sector of the Russian Federation. Other developments also point to growing state ambitions, including a $15-billion Siberian pipeline, due to begin pumping in 2008, which will shift Russian crude exports to Asia, particularly China, where the Kremlin is cultivating fresh strategic relationships.

A long-delayed law on subsoil resources, to be passed by the Russian parliament, the Duma, next year is expected to ban foreign-owned companies from exploring or developing Russian oil fields and other key mineral resources. Russia is the world`s second-largest producer of petroleum - about 8 million barrels of crude per day - which accounts for nearly 40 percent of the country`s Gross Domestic Product (GDP).

Putin has appointed some of his top aides to run the Kremlin`s newly acquired empire, but experts say the Kremlin aims to blunt international criticism of its takeover of the energy sector by offering a few symbolic management positions to prominent foreigners such as former German Chancellor Gerhard Schr?der, who has reportedly agreed to head the new North European gas pipeline project, which will carry Russian gas directly to Germany.