The sky is falling—or so the head of Gazprom, the state-owned Russian energy giant, would have us believe. Today’s FT reports that Alexei Miller has predicted oil will hit $250 per barrel in 2009. Should we believe such a prognostication? Before you throw all your money into investments in oil companies, let’s remember the backdrop for such a prediction: Russia is courting foreign investors concerned about the security of their investments at the same time as BP and a group of Russian shareholders are fighting over control of the TNK-BP joint venture oil company. Medvedev, Russia’s new president, has been attempting to convince foreign investors that Russia is a safe bet, but Russian shareholders in TNK-BP have been making this look questionable with the trouble they’ve been causing for BP (subscription required).
Dare I make my own prognostication? In the near future, we may be reading that Gazprom wanted to convince the recently inaugurated president that Russia’s oil reserves are simply “too important to be left to the private sector.” Ousting BP—through legal means or otherwise—could help move this process along. Of course, prognostication is a risky business. There might be other reasons for Miller’s $250 prediction. Valery Nesterov, a Russian energy analyst, suggests that Gazprom is trying to put
pressure on buyers to emphasize that…they must pay high gas prices in the future. (Hat tip: Johnson’s Russia List)
Whatever the explanation for Miller’s prediction, I think it’s clear that foreign investors in Russia better have exceptional skills of prognostication. Do any readers out there have any of their own prognostications?
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