Publication: North Caucasus Weekly Volume: 7 Issue: 42

The Agentstvo Natsionalnykh Novostei (ANN) on October 27 quoted Kadyrov as complaining that the federal authorities were ignoring the Chechen leadership’s proposal that revenues from oil extracted in Chechnya should be used to rebuild the republic – an idea which, Kadyrov claimed, is supported by President Vladimir Putin. “Officials in the federal ministries and agencies are in every way delaying the execution of the corresponding orders concerning this issue,” Kadyrov said, adding that “the main complaints of the Chechen Republic against the [state oil] company Rosneft concern the demands to guarantee the safekeeping of its [Chechnya’s] mineral wealth, to maintain the protection of the environment, and that money made from the export of oil is directed entirely towards the recovery of priority sectors of the [Chechen] economy and projects in the social sphere.”

Kadyrov added: “The situation that has developed in the fuel and energy complex of the Chechen Republic is causing the republic’s leadership serious concern. Money made from the sale of oil could become an important source of financing for the rebuilding of the republic’s economy and social sphere.”

ANN quoted Chechnya’s Industry and Energy Ministry as saying that the federal bodies in charge of monitoring the use of natural resources in the republic had uncovered “gross violations” of licensing agreements, including the excessive extraction of oil. Citing “specialists,” the ministry said that extracting oil in amounts exceeding those specified in the licensing agreements could lead to the complete “exhaustion” of the republic’s mineral wealth. The ministry complained that while the republic owns a 49-percent stake in the Rosneft subsidiary Grozneftegaz, the republic has no influence on how revenues from the sale of oil extracted in Chechnya are used, given that all such decisions are made by Grozneftegaz’s board of directors, on which Rosneft has a majority of the votes. Agence France-Presse on October 27 quoted Chechen Industry and Energy Minister Amadi Temishev as saying that the Chechen leadership had told Grozneftegaz that it could lose its license by June 2007 if it does not stop violating production conditions. According to AFP, Chechnya has accused Grozneftegaz of breaching the provisions of its production contract and failing to drill new oil wells and explore new fields.

The conflict between the Chechen leadership and Rosneft would appear to have a political dimension: the chairman of Rosneft’s board of directors is Kremlin deputy chief of staff Igor Sechin, a member of the faction of Kremlin siloviki who reportedly oppose Ramzan Kadyrov’s political ambitions.