A Study of the Relationship between the Russian Government and National Energy Companies (NECs) : The Case of Rosneft

Abstract

This paper examines the rise of Rosneft, one of the Russian national energy champions, and the key factors of Russia’s energy governance by analyzing the relationship between the state and national energy companies. President Putin argued that the state should manage energy resources from a strategic perspective and implemented energy nationalization. Rosneft was a minor state energy company in the late 1990s with 4% of national oil production and even faced a merger attempt by Gazprom. However, a series of acquisitions in the 2000’s, such as Yukos and TNK-BP, enabled Rosneft to rapidly grow to become the top national oil company. The rise of Rosneft was strongly influenced by core policy community and constituted a competition with that of Gazprom. Both companies also showed a limited inter-penetration between gas and oil sectors. Russia’s energy governance is also facing other challenges based on external factors such as the shale boom, a decrease in European demand, Russian pivot to Asia and the worldwide increase of LNG demand.