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Russian International Gas and Oil Relations.

In: Business and Management

Submitted By wah2
Words 605
Pages 3
Willy Hernandez
Professor Kerem
International Business
17 October 2012
Russian International Relations
What are the most important differences between international oil and gas markets? How is Russia situated in these markets?
International oil and gas markets are vitally important to any nation with these resources. They alone can create many opportunities for jobs, investments, trade, and political reforms. When one of these resources are discovered, it catches the attention of the world because these goods are known as “scarce resources”, and so, the international demand for them are very high.
Recently, Russia has tapped a massive amount of gas and oil reserves because as the Soviet Union disintegrated Russia began to plot what would bring them the most revenue to stabilize their economy. According to Journey to Sakhalin: Royal Dutch/Shell in Russia, “As a result; oil and gas dominated Soviet export earnings, reaching as high as 75% of the total.” Meaning that international consumers were willing to pay premium prices for Russia’s resources. However, critics pointed out that Russia failed in tapping potential markets where they could earn more money raising there GDP and possibly helping their economy. One example given is that if Russia’s leading gas firm, Gazprom, decided to tap the Asian markets, they could simultaneously stimulate the Russian/Asian transport industry. Russia is focused more on their gas resource than their oil because it is much more abundant than oil and has a higher demand than oil because they have 20% of the world’s gas resource.
How much protection do Production Sharing Agreements (PSA) provide for foreign investors? Why are PSA’s so controversial in Russia?
Initially, Product Sharing Agreements (PSA’s) relating to Sakhalin were offered to attract foreign investors to invest in “risky, technically challenging, and long term...

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