Robert Amsterdam

This week on MSNBC (our emphasis):

Russia: We Don't Need the West Anymore

Did the Russian government muscle Shell out of Sakhalin?

By Vitaliy Katsenelson, CFA

[Royal Dutch Shell's $7.5 billion sale to Gazprom may have been coerced by the Russian government. Vitaliy Katsenelson looks at the Sakhalin-2 sale and examines the long-term implications if Russia disregards Western investment.]

I can't say I was surprised to see that Royal Dutch Shell (NYSE: RDS.A) will be "selling" 50% plus one share of the Sakhalin-2 project to Gazprom for $7.5 billion. Several months ago, the Russian government wanted to take Royal Dutch Shell to court because it was ruining the environment. I suppose when the Russian government referred to the environment, it meant the economic environment, not Mother Nature. The "environmental" issue was very simple: Product sharing agreements (PSA) signed by the Russian government with Shell were not considered advantageous to Russia -- at least not anymore.
...
I'll be blunt: The Russian government manipulated its environmental/legal levers to muscle an ownership stake in the project out of Shell, possibly at a significant discount. I understand that it's so much easier to be sympathetic to the poor children and elders that this oil money is supposed to go to, than to a multibillion dollar, impersonal, foreign (Dutch to be exact) oil company.

It sounds like a Robin Hood act, taking money from the rich and giving it to the poor. It's certainly not the first time this has happened in Russia. In 1917, on Nov. 7 (still a widely celebrated holiday in Russia), under the leadership of Mr. Lenin, the masses took from the rich and gave to ... themselves. We all know how that story ended. You cannot have government thievery be a part of the free market system and expect the market to function normally.

Read the complete article here.