Battle Intensifies For Control Of Oil Resources

Publication: North Caucasus Weekly Volume: 5 Issue: 12

Now that Russian President Vladimir Putin has solidified his power–if not his legitimacy–with his stage managed reelection, he has the opportunity to make some fundamental changes in his Chechnya policies. An early test of Putin’s commitment to Akhmad Kadyrov will involve the struggle between the Chechen dictator and the “Rosneft” oil firm, which has escalated sharply in recent weeks. The struggle may force Putin to choose between two people who are his own loyal creatures: Kadyrov and Rosneft President Sergei Bogdanchikov.

According to a March 19 article by Sanobar Shermatova in Moskovskie novosti, sources close to Kadyrov are confidently predicting that his administration is on the verge of winning its fight to gain majority control of the Grozneftegaz firm, one of Rosneft’s many daughter companies. Shermatova also found that the Grozny-based firm, in which the pro-Moscow Chechen administration already has a 49 percent share, has mysteriously begun losing control of its property. Shadowy transactions are putting property at steeply discounted prices into the hands of a mysterious company called “Krening.” It is suspected, wrote Shermatova, that behind Krening is the Kadyrov team.

Kadyrov has also been attacking Rosneft on another front, claiming that Chechnya’s year-old constitution grants ownership rights of the republic’s oil and gas deposits to the Chechen people–which in practice, as is usual with such formulations, means to the politicians in power. He also is clearly hoping that he will soon be able to invoke another legal document: A treaty between the Chechen republic and the Russian federal government demarcating their respective powers and jurisdictions within Chechnya. Last year Kadyrov presented the Kremlin with his own proposed text for such a treaty; last autumn he was predicting that the treaty would be signed by the end of December. One of the points contained in the Kadyrov draft states that Moscow would acknowledge Chechnya’s ownership of its energy resources.

Shermatova’s sources have told her that it is precisely this point that has delayed the Kremlin’s acceptance of Kadyrov’s text. Control of Russia’s energy resources by the federal government has been a high priority for the Putin team, and on this issue its ambitions directly collide with Kadyrov’s.

According to a March 23 article by Zoya Svetova in Russky kurier, Kadyrov is so eager to get the treaty signed that his administration is hastening to adopt an official coat of arms for the republic: He wants to be able to seal the new treaty with all the appropriate pomp and symbolism. According to Svetova’s sources, the new coat of arms will definitely not include the traditional Chechen wolf, which would convey too threatening an image to the Russians. Instead, as was common in Soviet-era heraldry, the proposed Chechen coat of arms is said to feature an oil rig.

Rosneft, which would be the main loser if Kadyrov’s plan succeeds, has put considerable energy into trying to entrench its position in the northern Caucasus. Grozneftegaz produces about 1.5 million tons of oil products a year. That is a respectable amount, but not huge compared with the 20 million tons produced by Rosneft from fields as far east as Sakhalin. But Rosneft apparently needs Grozneftegaz as a link in its chain of energy properties linking the entire northern Caucasus. Also, Chechnya’s oil is of unusually high quality, and is useful for specialized high-tech applications in fields such as aviation. According to Shermatova’s sources, Bogdanchikov even managed to get a personal meeting with Putin in order to lobby for his company’s interests; the meeting was arranged by the well-connected oligarch Roman Abramovich.

Rosneft’s supporters within the Kremlin apparently have been hoping that the company would be able to avert a bloody struggle between the various clans within Chechnya for control of the republic’s energy wealth. But according to Shermatova, since Kadyrov’s election victory last autumn some of Kadyrov’s competitors have now become his partners–for example, the Dzhabrailov brothers who control the “Danako” oil company and the Bazhaev brothers of the “Alyans” oil company. “The current redistribution of petroleum properties is probably not happening without their influence,” she wrote.

If Kadyrov wins this fight, his political position will be stronger than ever. He not only will have undisputed control over a major source of wealth within Chechnya, but will have demonstrated that he still has the Putin administration’s support in spite of all the efforts of Russian nationalists in the security agencies to discredit him.