What happened in Russia is not the end of the world. But you’ll likely see less oil coming out of Russia over next 10 years.

Best,

Vitaliy

I don’t disagree with anything in your post. But what I was trying to highlight was that regardless of what is fair or not fair, this not the first time something like this has happened to a major oil company.

Certainly you cannot believe that the folks at Shell did not believe something like this could and probably would, happen.

Royal Dutch has been doing business with governments around the world for almost 100 years. While what happened in Russia may have been unfortunate, it isn’t the end of the world.

Besides, at the end of the day, it’s the consumer that pays for the folly of others.

Wax

When the original PSA was signed both sides were willing participants. Since then, Shell invested billions of dollars into Russia under the original contract. As I said in the article:

The Russian government manipulated its environmental/legal levers to muscle an ownership stake in the project out of Shell, possibly at a significant discount.

It is not much different than after a mechanic fixed your car at pre-negotiated price for you to say – “nah, It was not really a good deal for me. Unless you to take ½ off original price, I’ll call my cousin in city council and he’ll shut you down for not wearing your name tags (or any other silly reason).”

Vitaliy

I fail to understand your argument.

Shell made a very good business agreement and and the Russian government did not. Eventual the government realized they did not do so well at the conference table and brought in a new conference table.

Shell, understanding the business of business, says they like the new conference table and where do they sign.

Welcome to the world of commerce.

Your post made valid points, but at the end of the day, it’s a willing buyer and a willing seller that get things done. And I can’t think of a single major oil company not willing to be either.

Wax

This is why my firm emphasizes its China practice over its Russian practice. Russia was born with a silver spoon in its mouth (oil) and it has had it there for so long that it actually is starting to think it was put there due to its own genius. China and Vietnam are opening up, while Russia is closing. If it were not for oil, I think few foreign companies would be in Russia at all.

Any company that does not add a big premium for Russia risk is making a big mistake.