Russia on an investment project related to the acquisition
of 25%+1 share in Detskiy mir-Center, the largest children’s goods retail network in Russia.
ENERGY
The energy market, so vital to the Russian economy, is
certainly full of opportunities, but there is also cause for
caution. ‘On the one hand, it is still an attractive sector for
potential investments due to its current underdevelop-
ment and the huge opportunities to increase production
efficiency,’ comments Maxim Alekseyev. ‘Particularly the
favour for high-level processing of coal, gas, etc. can be
emphasized. Current processing technologies are outdat-
ed and investments in new technologies allowing to sig-
nificantly increase the produc- tion efficiency are in trend.
On the other hand, it was announced recently that
Michael Prokhorov and probably some other investors
are going to leave the energy sector. The reason is the last
government decision on tariffs, causing investors to
expect further government interventions into the regula-
tion of the energy sector.’
‘We are still not seeing a big influx of the medium-
sized oil companies/NOCs coming back in,’ comments
Steve Wardlaw. ‘However, we are seeing more smaller
M&A as people rationalize portfolios, and also an increase
in work in the power sector (which is a natural result of
‘The low hanging fruit in the oil sector
that was enjoyed for the last 20 years is
giving way to new projects in order to
maintain Russia’s production levels and
export demands. Large energy projects
that in the past have not been
developed due to the immense capital
required are starting to see movement.’
the sector’s unbundling two years ago). Large projects
are attracting a high level of interest – for example, Yamal
LNG, where we are project counsel, is negotiating with a
number of potential major investors. Large projects are
becoming more scarce, and there is a lot of political will
to progress Yamal LNG, which is attractive to the IOCs.’
‘The chaos of the early years is clearly gone, and companies from all over the world are looking at Russia as a
more stable place to do business,’ says Doug Glass of
Akin Gump’s London office, who previously lived and
worked in Russia and who focuses on energy transactions
in emerging markets. ‘The low hanging fruit in the oil
sector that was enjoyed for the last 20 years is giving way
to new projects in order to maintain Russia’s production
levels and export demands. Large energy projects that in
the past have not been developed due to the immense
capital required are starting to see movement. For exam-
ple, Nord Stream is well underway. Shtockman and
Yamal LNG projects are moving forward. If it were not for
the impediment of the Strategic Resources legislation
that requires significant State-company participation and
restricts non-Russian companies in competing for the
largest projects, we would no doubt see even more activ-
ity on a large scale. On the other hand, Russian corpo-
rates, who in the past have been prone to stay at home,
have branched out and are beginning to become more
multi-national. A consortium of the largest Russian com-
panies have signed up the Junin- 6 block in Venezuela;
Lukoil has begun operations on its large West Qurna-2
block in Iraq, and has moved into West Africa and Viet
Nam; and Rosneft is carefully looking at projects in
Europe. We would expect to see the appearance of more
Russian company activity around the world as they
become more sophisticated and well financed.’
The future of the energy market in Russia has without
doubt exciting possibilities. ‘Talks over developments on
alternative sources of energy are becoming more wide-
spread,’ concludes Maxim Alekseyev. ‘While no real proj-
ects have been launched yet, in a little while this could
bring a boom to the energy sector.’ ■
