Political Risk
Eini Laaksonen Political risks of foreign direct investment in the Russian gas industry – The Shtokman gas field project in the Arctic Ocean
Electronic Publications of Pan-European Institute 14/2010
ISSN 1795 - 5076
Political risks of foreign direct investment in the Russian gas industry – The Shtokman gas field project in the Arctic Ocean
Eini Laaksonen1
14/2010 Electronic Publications of Pan-European Institute www.tse.fi/pei
1
Eini Laaksonen is Research Associate at the Pan-European Institute at the Turku School of Economics, University of Turku. Her research interests include political risks for foreign direct investment particularly in the Russian Arctic and the general investment environments of St. Petersburg and Murmansk region.
Eini Laaksonen
PEI Electronic Publications 14/2010 www.tse.fi/pei
Contents EXECUTIVE SUMMARY 1
1.1 1.2 1.3 1.4 1.5
6 7
7 12 20 23 28
THE RUSSIAN GAS INDUSTRY AND POLITICAL RISK
The Russian gas production and the Arctic gas resources Experiences of political risk in Russia The Shtokman gas field project Earlier studies on political risk in Russia The objective and structure of the study
2
2.1 2.2 2.3 2.4 2.5
POLITICAL RISK
The concept of political risk Macro sources of political risk Micro sources of political risk Effects of political risk on business The political risk construct for a gas field project
30
30 34 39 47 51
3 4
4.1 4.2 4.3 4.4 4.5 4.6
RESEARCH DESIGN POLITICAL RISK IN THE SHTOKMAN PROJECT
Macro-level sources Industry-level sources Company-level sources Project-level sources Effects of political risk on business The main empirical findings
58 63
63 68 75 79 81 87
5
5.1 5.2 5.3 5.4
CONCLUSIONS
Theoretical implications Political risk in the Shtokman project The future development of the Shtokman field Limitations and suggestions for further research
91
91 100 104 108
2
Eini Laaksonen
PEI Electronic Publications 14/2010 www.tse.fi/pei
Electronic Publications of Pan-European Institute 14/2010
ISSN 1795 - 5076
Political risks of foreign direct investment in the Russian gas industry – The Shtokman gas field project in the Arctic Ocean
Eini Laaksonen1
14/2010 Electronic Publications of Pan-European Institute www.tse.fi/pei
1
Eini Laaksonen is Research Associate at the Pan-European Institute at the Turku School of Economics, University of Turku. Her research interests include political risks for foreign direct investment particularly in the Russian Arctic and the general investment environments of St. Petersburg and Murmansk region.
Eini Laaksonen
PEI Electronic Publications 14/2010 www.tse.fi/pei
Contents EXECUTIVE SUMMARY 1
1.1 1.2 1.3 1.4 1.5
6 7
7 12 20 23 28
THE RUSSIAN GAS INDUSTRY AND POLITICAL RISK
The Russian gas production and the Arctic gas resources Experiences of political risk in Russia The Shtokman gas field project Earlier studies on political risk in Russia The objective and structure of the study
2
2.1 2.2 2.3 2.4 2.5
POLITICAL RISK
The concept of political risk Macro sources of political risk Micro sources of political risk Effects of political risk on business The political risk construct for a gas field project
30
30 34 39 47 51
3 4
4.1 4.2 4.3 4.4 4.5 4.6
RESEARCH DESIGN POLITICAL RISK IN THE SHTOKMAN PROJECT
Macro-level sources Industry-level sources Company-level sources Project-level sources Effects of political risk on business The main empirical findings
58 63
63 68 75 79 81 87
5
5.1 5.2 5.3 5.4
CONCLUSIONS
Theoretical implications Political risk in the Shtokman project The future development of the Shtokman field Limitations and suggestions for further research
91
91 100 104 108
2
Eini Laaksonen
PEI Electronic Publications 14/2010 www.tse.fi/pei
References: PEI Electronic Publications 14/2010 www.tse.fi/pei BO (2010a) Gazprom seeks new leader of Shtokman Development BP Statistical Review of World Energy (2009) June 2009 E&P Economist (2009) The hunt for shale gas in Europe: bubbling under FT (2010) PEI Electronic Publications 14/2010 www.tse.fi/pei Koivurova, Timo (2010) Tausta: Mitä Norja ja Venäjä lopulta sopivat rajakiistassaan? YLE NE (2010) Gazprom game changer: Hello Yamal, goodbye Shtokman. New Europe. Issue 871, January 31, 17. NSIDC (2009) What is the Arctic? National Snow and Ice Data Center. , retrieved 11.9.2009. PEI Electronic Publications 14/2010 www.tse.fi/pei NYT (2006b) Shell cedes control of Sakhalin-2 to Gazprom RFE (2007) Russia: BP-TNK, Gazprom, and the Kovytka gas field. Radio Free Europe., retrieved 7.4.2010. RIA (2006) Easy come, easy go: Shell and Sakhalin. RIA Novosti. , retrieved 2.11.2009. Statoil (2009) Corporate Announcement. , retrieved 19.4.2010. StatoilHydro Annual Report (2008) , retrieved 19.4.2010. Putin takes hard line on Shell Sakhalin dispute. Times Online. , retrieved 2.11.2009. TO (2006) TO (2007) Gazprom takes aim at Exxon in battle against foreign ownership. Times Online. , retrieved 6.4.2010.