Maduro, Schröder, and the Rosneft. Energy Blog

Aug 15 2017

One of  last week’s key stories was another major instance of political activity unrelated to business on the part of the Russian state-owned oil giant Rosneft.

At the same time, the company’s name is now linked to two political figures: Venezuelan President Nicolas Maduro, who struggles to keep his presidency at any cost, and ex-chancellor of Germany Gerhard Schröder, who is also well-known as one of the key lobbyists for Russian energy companies in Western Europe.

Reuters, referring to the high-ranking manager of the state oil company Petroleos de Venezuela, has recently reported that in at least two situations the Venezuelan government used funds provided by Russia to avoid a looming bond default. Russia and Rosneft have become a key source of Funding for the government of Nicholas Maduro, who is trying to avoid both a sovereign default and a political coup.  The ruling regime is increasingly turning to Russia for loans and in return offers valuable oil assets as collateral. This information was reported right after the news that Rosneft paid $ 6 billion in prepayments for the supply of oil from Venezuela.

Free Russia asked Vladimir Milov, the director of the Energy Policy Institute to comment:

“It looks quite clear that decisive actions of the Maduro regime – aggressive pushing through the establishment of the Constituent Assembly, effectively overriding the opposition-led Parliament – have some financial backing from outside powers, namely Russia. Otherwise, why would oil-rich Russia buy oil from Venezuela worth $6 billion (that’s about the size of the annual oil output of Vietnam), and even provide full advance payment for it – whereas Rosneft’s own production volume is one of the biggest in the world (5,7 million barrels per day). Even if that is not enough to meet the company’s downstream needs, extra oil could have been easily bought in the market for better conditions without such generous advances.

The answer clearly is politics. Putin wants to support the Maduro regime, but it’s difficult to do it via state or state-bank loans – Venezuela’s “quality” as a borrower is a joke, there’s something of a consensus in the market that this state is near default. Then Rosneft comes along with “prepayments”. This scheme does not leverage the Russian state or the Russian banks with “toxic” assets and it will be repaid in a natural form (being out of cash, Venezuela nonetheless still produces physical oil).
Despite Rosneft’s claims that “it does not intend” to buy more Venezuelan crude with prepayment, who knows. So far, the scheme has worked, and so far, saved the Venezuelan regime from collapse. There’s a price to be paid: many newswires reported Rosneft’s net earnings dropped by 20% during the first half of this year.  The primary reason for this was the increase in the costs of purchased oil by over 30% (we’re back to the question of why would one of the biggest oil-producing companies be interested in buying oil at world prices from someone else). Generous oil purchases from Venezuela have clearly contributed to that. If the Maduro regime needs more money from Putin, here’s a scheme which can always be expanded. That may explain Maduro’s decisiveness.”

As for ex-Chancellor Gerhard Schroeder, his future is also likely to be closely connected to Rosneft.  Schroeder was nominated to the Board of Directors by the Russian government on August 11th.

We have asked the Free Russia Foundation’s energy expert, Ilya Zaslavsky, to share his thoughts on this:

“The news that Gerhard Schröder will be an independent member of Rosneft’s Board of Directors is another stain on the history of his moral fall, as an unprincipled politician and man. It is quite widely known that right before he left the post of German Chancellor he approved the Gazprom gas pipeline project Severny Potok-1.  He then quickly received a warm high-paying place in the company in 2005, where he was in the company of Putin’s friend from Stasi Matthias Warnig (now head of Nord Stream).

The term “shroedification” was born exactly out of such well-known facts which. This term denotes the fact of a veiled bribe from the Kremlin to the former great political figures from the West, so that they justify and in every way serve the subversive interests of Moscow in democratic countries.

It is less known that Schroeder served the interests of the Kremlin, and also helped the Russian oligarchs some years before the Nord Stream 1,  to make the Institute of independent directors in the Russian corporations vacant.  In 2009, after corporate raiding and the capture of TNK-BP by oligarchs close to the Kremlin and Igor Sechin, Mikhail Fridman and his partners from the consortium of AAR, Schroeder and Alexander Shokhin has been called independent directors of the company. However, it was clear to everyone that they would be “independent” only in favor of the Russian part of the company’s owners who seized the operational control of TNK-BP with the help of the FSB and other law enforcement agencies.

Rosneft, a company where Igor Sechin rules, bypasses commercial logic when it comes to the interests of the Kremlin, both inside and outside of Russia, is now going through hard times thanks to such mediocre leadership. As the latest accounts show, the company essentially has a debt of $ 82 billion, out of which, on behalf of the Kremlin, it actually gave $13.5 billion to the kleptocratic regime of Venezuela. Servants like Schroeder are obviously called upon by the company to try to “normalize” such results.”

 

At the same time, the company’s name is now linked to two political figures: Venezuelan President Nicolas Maduro, who struggles to keep his presidency at any cost, and ex-chancellor of Germany Gerhard Schröder, who is also well-known as one of the key lobbyists for Russian energy companies in Western Europe.

Reuters, referring to the high-ranking manager of the state oil company Petroleos de Venezuela, has recently reported that in at least two situations the Venezuelan government used funds provided by Russia to avoid a looming bond default. Russia and Rosneft have become a key source of Funding for the government of Nicholas Maduro, who is trying to avoid both a sovereign default and a political coup.  The ruling regime is increasingly turning to Russia for loans and in return offers valuable oil assets as collateral. This information was reported right after the news that Rosneft paid $ 6 billion in prepayments for the supply of oil from Venezuela.

Free Russia asked Vladimir Milov, the director of the Energy Policy Institute to comment:

“It looks quite clear that decisive actions of the Maduro regime – aggressive pushing through the establishment of the Constituent Assembly, effectively overriding the opposition-led Parliament – have some financial backing from outside powers, namely Russia. Otherwise, why would oil-rich Russia buy oil from Venezuela worth $6 billion (that’s about the size of the annual oil output of Vietnam), and even provide full advance payment for it – whereas Rosneft’s own production volume is one of the biggest in the world (5,7 million barrels per day). Even if that is not enough to meet the company’s downstream needs, extra oil could have been easily bought in the market for better conditions without such generous advances.

The answer clearly is politics. Putin wants to support the Maduro regime, but it’s difficult to do it via state or state-bank loans – Venezuela’s “quality” as a borrower is a joke, there’s something of a consensus in the market that this state is near default. Then Rosneft comes along with “prepayments”. This scheme does not leverage the Russian state or the Russian banks with “toxic” assets and it will be repaid in a natural form (being out of cash, Venezuela nonetheless still produces physical oil).
Despite Rosneft’s claims that “it does not intend” to buy more Venezuelan crude with prepayment, who knows. So far, the scheme has worked, and so far, saved the Venezuelan regime from collapse. There’s a price to be paid: many newswires reported Rosneft’s net earnings dropped by 20% during the first half of this year.  The primary reason for this was the increase in the costs of purchased oil by over 30% (we’re back to the question of why would one of the biggest oil-producing companies be interested in buying oil at world prices from someone else). Generous oil purchases from Venezuela have clearly contributed to that. If the Maduro regime needs more money from Putin, here’s a scheme which can always be expanded. That may explain Maduro’s decisiveness.”

As for ex-Chancellor Gerhard Schroeder, his future is also likely to be closely connected to Rosneft.  Schroeder was nominated to the Board of Directors by the Russian government on August 11th.

We have asked the Free Russia Foundation’s energy expert, Ilya Zaslavsky, to share his thoughts on this:

“The news that Gerhard Schröder will be an independent member of Rosneft’s Board of Directors is another stain on the history of his moral fall, as an unprincipled politician and man. It is quite widely known that right before he left the post of German Chancellor he approved the Gazprom gas pipeline project Severny Potok-1.  He then quickly received a warm high-paying place in the company in 2005, where he was in the company of Putin’s friend from Stasi Matthias Warnig (now head of Nord Stream).

The term “shroedification” was born exactly out of such well-known facts which. This term denotes the fact of a veiled bribe from the Kremlin to the former great political figures from the West, so that they justify and in every way serve the subversive interests of Moscow in democratic countries.

It is less known that Schroeder served the interests of the Kremlin, and also helped the Russian oligarchs some years before the Nord Stream 1,  to make the Institute of independent directors in the Russian corporations vacant.  In 2009, after corporate raiding and the capture of TNK-BP by oligarchs close to the Kremlin and Igor Sechin, Mikhail Fridman and his partners from the consortium of AAR, Schroeder and Alexander Shokhin has been called independent directors of the company. However, it was clear to everyone that they would be “independent” only in favor of the Russian part of the company’s owners who seized the operational control of TNK-BP with the help of the FSB and other law enforcement agencies.

Rosneft, a company where Igor Sechin rules, bypasses commercial logic when it comes to the interests of the Kremlin, both inside and outside of Russia, is now going through hard times thanks to such mediocre leadership. As the latest accounts show, the company essentially has a debt of $ 82 billion, out of which, on behalf of the Kremlin, it actually gave $13.5 billion to the kleptocratic regime of Venezuela. Servants like Schroeder are obviously called upon by the company to try to “normalize” such results.”

 

Free Russia Foundation Calls for Urgent and Concrete Steps to Stop Putin’s Global Assassination Campaigns

Feb 11 2021

Vladimir Kara-Murza, a prominent Russian pro-democracy advocate, was closely tracked by an FSB assassination squad when he suffered perplexing and near-fatal medical emergencies that sent him into coma in 2015 and 2017, establishes a new investigation by the Bellingcat group

Documents uncovered by Bellingcat show that this is the same assassination squad implicated in the August 2020 assassination attempt on Alexey Navalny and whose member has inadvertently confirmed the operation in a phone call with Navalny.   

Bellingcat has also established the FSB unit’s involvement in the murder of three Russian activists, all of whom died under unusual but similar circumstances. 

Taken together, these independent nongovernment investigations establish the fact of systemic, large-scale extrajudicial assassinations carried out by Putin’s government against its critics inside and outside of Russia, including with chemical weapons banned by the Chemical Weapons Convention. 

Free Russia Foundation calls on the international community to formally investigate and prosecute Putin’s government for these crimes. 

Free Russia Foundation calls on the Biden Administration to direct the FBI to release investigation materials surrounding the assassination attempts against Vladimir Kara-Murza that have been denied to him thus far. 

Free Russia Foundation calls on the international community to articulate measures to compel Russia to free Alexey Navalny from his illegal incarceration where his life remains in dire danger. 

Free Russia Foundation condemns in strongest terms today’s court sentence announced to Alexey Navalny

Feb 02 2021

Continued detention of Navalny is illegal and he must be freed immediately. Suppression of peaceful protests and mass arrests of Russian citizens must stop, and the Kremlin must release all those illegally detained and imprisoned on political motives. Free Russia Foundation calls on the international community, the US and European leadership, to move beyond expressions of concern and articulate a set of meaningful instruments to compel the Kremlin to stop its atrocities.

Free Russia Foundation demands Navalny’s immediate release

Jan 17 2021

On January 17, 2021, Putin’s agents arrested Alexey Navalny as he returned to Russia from Germany where he was treated for a near-deadly poisoning perpetrated by state-directed assassins.

Navalny’s illegal arrest constitutes kidnapping. He is kept incommunicado from his lawyer and family at an unknown location and his life is in danger.

Free Russia Foundation demands his immediate release and an international investigation of crimes committed against him by Putin’s government.

The European Court of Human Rights Recognizes Complaints on Violations in “Ukraine v. Russia” as Admissible

Jan 14 2021

On January 14, 2021, the European Court of Human Rights published its decision on the case “Ukraine v. Russia”. The Grand Chamber of the Court has recognized complaints No. 20958/14 and No. 38334/18 as partially admissible for consideration on the merits. The decision will be followed by a judgment at a later date.

The case concerns the consideration of a violation of the European Convention on Human Rights related to Russia’s systematic administrative practices in Crimea. 

The admissibility of the case is based on the fact that, since 2014, the Russian Federation has exercised effective control over the territory of Crimea, and, accordingly, is fully responsible for compliance with the norms of the European Convention on Human Rights in Crimea. The Court now needs to determine the specific circumstances of the case and establish the facts regarding violations of Articles of the Convention during two periods: from February 27, 2014 to March 18, 2014 (the period of the Russian invasion); and from March 18, 2014 onward (the period during which the Russian Federation has exercised effective control over Crimea).

The Court has established that prima facie it has sufficient evidence of systematic administrative practice concerning the following circumstances:

  • forced rendition and the lack of an effective investigation into such a practice under Article 2; 
  • cruel treatment and unlawful detention under Articles 3 and 5; 
  • extending application of Russian law into Crimea with the result that, as of  February 27, 2014, the courts in Crimea could not be considered to have been “established by law” as defined by Article 6; 
  • automatic imposition of Russian citizenship and unreasonable searches of private dwellings under Article 8; 
  • harassment and intimidation of religious leaders not conforming to the Russian Orthodox faith, arbitrary raids of places of worship and confiscation of religious property under Article 9;
  • suppression of non-Russian media under Article 10; 
  • prohibition of public gatherings and manifestations of support, as well as intimidation and arbitrary detention of organizers of demonstrations under Article 11; 
  • expropriation without compensation of property from civilians and private enterprises under Article 1 of Protocol No. 1;
  • suppression of the Ukrainian language in schools and harassment of Ukrainian-speaking children under Article 2 of Protocol No. 1; 6 
  • restricting freedom of movement between Crimea and mainland Ukraine, resulting from the de facto transformation (by Russia) of the administrative delimitation into a border (between Russia and Ukraine) under Article 2 of Protocol No. 4; and, 
  • discriminating against Crimean Tatars under Article 14, taken in conjunction with Articles 8, 9, 10 and 11 of the Convention and with Article 2 of Protocol No. 4 to the Convention.

Cases between states are the rarest category considered by the ECHR. Almost all cases considered in Strasbourg concern individuals or organizations and involve illegal actions or inaction of the states’ parties to the Convention. However, Art. 33 of this Convention provides that “any High Contracting Party may refer to the Court the question of any alleged violation of the provisions of the Convention and its Protocols by another High Contracting Party.” In the entire history of the ECHR since 1953, there have been only 27 such cases. Two of them are joint cases against Russia, both of which concern the Russian Federation’s aggression on the territory of its neighboring states, Georgia and Ukraine.

New Year’s Blessings to All

Dec 30 2020

While 2020 gave us unprecedented challenges, it created transformative changes in the way we work and communicate. The hours of Zoom calls seemingly brought us all closer together as we got a glimpse into each other’s makeshift home offices along with interruption by kids and the family pets. Remote work also made us appreciate human interactions, in-person events and trips much more!

As 2020 comes to an end, we want to especially thank our supporters who continued to believe in our mission and the value of our hard work, and we hope the coming year brings all of us progress and growth for democracy throughout the world. We’d also like to thank our partners and staff in the U.S. and abroad, and we know how hard everyone has worked under difficult world changes to achieve so many of our objectives this year.

We send our best wishes to all who have stayed in the fight for democratic reforms and for the values of basic human rights. We look forward to a new year with the hope of many positive changes to come.

– Natalia Arno and the Free Russia Foundation team.