From Libya to Syria to Egypt, Russia is taking on an increasingly ambitious role in the Middle East as it positions itself as the region’s new power broker. As the Financial Times notes, those ambitions have lately been paralleled by Rosneft, Russia’s state-owned oil company:
Russia’s Rosneft will this week take custody of its first independently sourced cargo of Kurdish crude oil from Turkey’s port of Ceyhan, a key step in its strategic push into Middle East energy markets and its attempts to expand trading.
The world’s largest listed oil company by output has spent the past four months trumpeting agreements to buy oil from Egypt, Libya and Iraqi Kurdistan, drilling exploration wells in southern Iraq and considering opportunities in Lebanon, as it chases deals to fuel its fledgling international expansion. […]
Run by Igor Sechin, a close ally of Russian president Vladimir Putin, Rosneft has previously found its attempts to build a full-scale oil trading business hampered by sanctions, frustrating efforts to get anywhere near the influence of major global players such as BP, Shell or Total.
It’s an interesting article, with lots of insights as to how the Putin’s personalized Russian state operates, worth reading carefully. It brings up an important point, almost in passing: much of Rosneft’s recent global activity (which has in turn shaped Russian foreign policy) arose as a reaction to the Western sanctions regime, which dramatically restricted its ability to partner with Western companies. Far from permanently impeding Rosneft’s growth, it turns out those sanctions ultimately left Rosneft more determined to find other foreign partners.
Libya offers a revealing case study. In February, Rosneft signed a deal with Libya’s National Oil Company (NOC) to invest in its energy infrastructure and purchase future Libyan crude. That deal came as Russia began more actively supporting General Khalifa Haftar, the strongman currently presiding over the country’s oil-rich east. The parameters of the arrangement are clear: Russia backs Haftar’s forces, and Haftar keeps the oil flowing to Russia via NOC. Despite bumps along the road—Haftar briefly lost control of several oil ports in early March, for instance—the deal is an appealing one for the Kremlin. Russia gains a Libyan client and sticks it to the west, while Rosneft gets a bigger share of the Libyan oil market, which is currently enjoying a rebound.
Rosneft’s other Middle Eastern forays also coincide with Kremlin priorities. In Egypt, a country that is now aiding Moscow’s actions in Libya, Rosneft recently acquired a major stake in the Zohr natural gas field and inked deals on purchasing Egyptian crude and supplying LNG. In Lebanon, where Russia has lately been playing peacemaker, Rosneft is making a bid for offshore licenses. Elsewhere, Rosneft’s dealings have helped Russia make inroads with strange bedfellows who otherwise oppose Russia’s policy in the Middle East. Such is the case with Qatar, which bought a 20% stake in Rosneft despite funding anti-Assad rebels in Syria.
Rosneft’s global clout should not be overestimated. It is dwarfed by Western giants like Shell and BP, and it remains a paragon of crony capitalism rather than efficient economic management. Still, Rosneft’s improbable recovery and expanding trading operations in the Middle East offers a cautionary tale to those who predicted its cratering as a result of robust sanctions three years ago. The world is a more complicated place than that.