Eni SpA (ADR) (E), Schlumberger Limited. (SLB), Exxon Mobil Corporation (XOM): Has Russia Just Become Energy’s Capital?

Chapters four and 11 are especially relevant to those who approach the subject largely as investors. Both chapters deal with the arrival of foreign companies whose express purpose has been to boost (and profit from) Russia’s outmoded oil and gas technology. The first arrivals occurred in the 1990s, and the second began at the outset of this century. Included is a detailed look at TNK-BP, from which sides of the venture ended up partaking handsomely, albeit following a steady stream of onerous contretemps.

Also discussed is oil-field services leader Schlumberger Limited. (NYSE:SLB)‘s more benign movement into the country, where it began to gain a toehold a decade and a half ago. And there is a look at Royal Dutch Shell plc (ADR) (NYSE:RDS.A)‘s misadventures on remote and desolate Sakhalin Island. The company was forced a half-dozen years ago to sell its operating position in Sakhalin-2 to Gazprom for a ridiculous $7.45 billion, rather than the $20 billion that Shell had originally advanced as its concept of a fair market value.

Assessing the future
Looking ahead, Gustafson asserts:

The history of the global oil industry over the past twenty years demonstrates its importance as a high-tech knowledge industry. The latest and most spectacular illustration of this is the renaissance of oil and gas production in the United States from shale gas and tight oil, the products of entrepreneurship and innovation. But…there is every bit as much potential for a similar renaissance in Russia, in the very center of the Soviet oil and gas industry, the Volga-Urals, and West Siberia.

Our task as energy investors, it seems to me, is to keep close tabs on events in this frequently volatile country, especially as they affect western companies with connections to it. I’m referring especially to Exxon Mobil Corporation (NYSE:XOM) and BP, two companies that stand to benefit from or be damaged by Russian ebbs and flows.

The article Has Russia Just Become Energy’s Capital? originally appeared on Fool.com and is written by David Lee Smith.

Fool contributor David Lee Smith has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

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