Diversification for Growth: What the Russian Economy Needs

By Toby T. Gati, Senior International Advisor

President Putin has seized upon the global need for more diverse supplies of energy to meet one of his country’s highest priorities: Russia’s integration with the global economy. As U.S., Japanese, European and Asian companies solidify and expand their access to Russian oil and natural gas reserves, Russian oil companies are adapting to the requirements and norms of the international economy and becoming global energy concerns. But behind these high profile deals -- BP’s cash and equity merger with Russia’s third largest oil company, Tyumen Oil, to create TNK-BP, and the merger of Russia’s second and fifth largest oil companies, Yukos and Sibneft, to create the world’s fourth largest oil company in terms of reserves -- there is another story unfolding much more quietly. This is the steady expansion of Russia’s first tier companies -- primarily these same energy and commodity companies -- and of western multinationals into the domestic