This measure is a preventive response to the possible freezing of domestic assets abroad
Russian President Vladimir Putin has signed a decree that prohibits investors from unfriendly countries from making transactions with shares of all strategic enterprises and joint-stock companies, their “daughters”, as well as with shares in the Sakhalin-1 projects and in the Kharyaginsky field. The document will last until the end of this year, but it can be extended if necessary. In fact, according to experts, this is a response to threats to nationalize the ownership of domestic assets of oil and gas companies.
On Friday, August 5, Russian President Vladimir Putin banned by his decree investors from unfriendly countries from making deals with domestic strategic enterprises, their shares and “daughters”. The document also concerns transactions with shares of users of all major oil, gas and coal deposits (at least 20 million tons of oil, at least 20 billion cubic meters of gas or at least 35 million tons of coal), uranium, especially pure quartz raw materials, rare earths of the yttrium group, nickel, cobalt, tantalum, niobium, beryllium, copper, diamonds, gold, lithium, platinum group metals, as well as offshore and offshore subsurface areas.
Now transactions with such shares will be possible only on the basis of a special permission of the head of state. The document comes into force from the date of its official publication. At the same time, the validity period of the restrictions can be extended.
According to experts, the president’s decision to freeze foreign assets in Russia is a protective measure designed to protect the interests of Russian companies in case of expropriation/nationalization of Russian assets abroad.
Such plans have been repeatedly reported in foreign media with reference to the top officials of the states. So, on April 4, the German authorities took Gazprom Germania under temporary management. The head of the ministry, Robert Habek, justified the decision by the company’s opaque legal relations and violation of registration rules. They renamed the company SEFE Securing Energy for Europe, explaining that they intend to guarantee the energy security of Germany and Europe. In July, the German Cabinet adopteda law allowing the government to acquire a stake in the group. And already at the end of May, the Austrian authorities followed the example of the Germans. Chancellor Karl Nehammer said that Gazprom will be deprived of the largest gas storage facility in the republic in Heidach, Austria, if the Russian company does not fill it with gas. Earlier in May, in an interview with the Austrian media, he threatened to take it away from Gazprom if it was not filled with blue fuel and transfer it to another supplier.
The fate of being forcibly nationalized may also affect Rosneft’s share in the RSK refinery in the German city of Schwedt. Now the Russian oil and gas company owns 54.17% in the refinery through Rosneft Deutschland. Since March, there has been talk in Germany about the nationalization/expropriation of the domestic part of the plant. PCK Raffinerie Schwedt is located near the border with Poland and has a region-forming significance for the whole of East Germany andthe capitals of the country, providing more than a thousand people with jobs, and consumers with gasoline, diesel fuel, aviation kerosene and other petroleum products. The oil at the refinery comes from Russia via the Druzhba oil pipeline. It is the lack of alternative to Russian oil supplies to the RSK and fears of fuel shortages in the region in case of refusal of oil from the Russian Federation that prevent the German authorities from deciding on the nationalization of the plant.
Nevertheless, in April, Deputy Prime Minister of Germany Robert Habek spoke about the possible expropriation of the RSK. In May, German Chancellor Olaf Scholz said that he did not rule out the nationalization of Rosneft’s stake in RSK with subsequent transfer to another owner. In addition, the authorities of the land of Brandenburg, where the plant is located, insist on a new shareholder structure. At the end of May, the Bundesrat approved an amendment to the German Energy Security Law providing for the possibility of nationalization of energy companies in exceptional situations.
Against the background of these serious threats, the Russian government adopted a new decree. As a response, oil and gas companies should be protected by the country’s leadership. At the same time, it is important to emphasize that the Russian authorities do not plan to take away the shares owned by foreign companies in domestic enterprises. They do not prohibit foreign partners from working and earning in Russia. The decree on freezing their assets is a kind of hedging of risks and defending the interests of the Russian Federation.
The current presidential decree imposes restrictions on the activities of foreign companies in PSA projects, but foreign partners are not deprived of their property, Alexey Grivach, Deputy Director General of the National Energy Security Fund, stressed in his comment to Vedomosti. According to the expert, it is not about nationalization of enterprises, but about protectionenergy security of Russia. As an example, the expert cited the situation with the Sakhalin-1 project, when ExxonMobil unilaterally began to curtail production, which had the most negative consequences for Sakhalin and the Far East as a whole. “This decision is largely reciprocal in nature, the task of the decree is to ensure the further activity of PSA projects, to prevent their curtailment,” the expert stressed.
“I will say right away that this is not nationalization, but a preventive measure of the Russian authorities, in case foreigners somehow freeze Russian assets abroad. At the same time, the production sharing agreement is spelled out in the federal law, which no one has canceled, this regime is still in effect. We won’t have to talk about new foreign investors yet, but perhaps this will give them time to think. May changethe geopolitical situation, and they will understand that Russian assets are not so bad, they are profitable assets. Perhaps, after this moratorium, they will not want to leave. This will give time out for the Russian side as well,” commented financier Sergey Suverov on RBC TV.
It should be noted that the decree also introduces a ban on transactions with shares of Russian banks. The list of these financial and credit organizations will be prepared by the Cabinet of Ministers and the Central Bank.