Publication: Monitor Volume: 2 Issue: 198

Chechnya’s new coalition government met yesterday for the second time and discussed the oil industry. The Chechens plan in mid-November to resume refining oil and to begin producing gasoline. By the end of November they hope to be supplying the republic with its own petroleum products. Armed guards have already taken control of all the oil refineries and the main routes for transporting petroleum. By a decree of Zelimkhan Yandarbiev, it is now illegal to produce gasoline privately. A special branch of the Ministry of Internal Affairs of Chechnya-Ichkeria has been tasked with keeping track of oil refining and the sale of petroleum products. (RTR, October 22)

When Grozny and a large part of the republic were under the control of federal troops, the illegal trade in petroleum products was widespread. Homemade gasoline was sold on the street and powered most of the civilian automobiles in Chechnya. Zia Bazhaev, president of YUNKO (Southern Oil Company), which had a government monopoly on the extraction and refining of Chechen oil during this period, told the Monitor that about 30 percent of Chechen oil was being illegally extracted by criminal groups. These bootleg oil companies had their own workers and equipment. Sometimes, entire refineries would spring up next to oil pipelines, to refine oil that had been illegally siphoned off. Some of these operations, Bazhaev maintains, were under the control of opposition groups, allowing them to supply their army with gasoline even before they took Grozny in August.

Chechnya’s new coalition government now intends to do what the federal forces failed to do: monopolize the production of petroleum products. But this policy may run into resistance from radical Chechen field commanders. Shamil Basaev told the Monitor in August that, once final victory was achieved, he would destroy the republic’s oil complex so that neither Russia nor any other country would ever be tempted to attack Chechnya again.

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