The Kremlin is now in Washington," observed Heidar Aliyev, the former Azerbaijan president to his foreign policy adviser. The consummate Soviet insider was reflecting on the dissolution of the USSR, formalised on December 26, exactly two decades ago.
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At first, it seemed that one of the defining geopolitical events of the 20th century would transform the global oil and gas industry. For the first time since the 1917 Russian Revolution, the Caspian's prodigious oil and gas resources were open to foreign investment.
The Soviet oil industry, inefficient and outdated, collapsed as the complex linkages between what had been subordinate republics were disrupted. But as wasteful state industries also shut down, oil exports from the former Soviet states actually increased - helping to keep oil prices low throughout the 1990s, a time of Middle Eastern economic malaise.
In the "Sale of the Century", the majority of Russian oil reserves passed into private hands. BP, Exxon and Shell suddenly had to contend with new rivals carved out of Soviet ministries - gas giant Gazprom, Kremlin favourite Lukoil and westernised Yukos.
A new breed of buccaneering oligarchs - the politically ambitious Mikhail Khodorkovsky, Chelsea owner Roman Abramovich and others - made themselves into billionaires and became powerful enough to secure Boris Yeltsin's re-election. Beginning as asset-strippers, by the late 1990s, they were modernising their firms, imitating western-style corporate governance and increasing production in the "West Siberian miracle".
Western companies missed out on this bonanza. They discovered that, as one executive put it, "the Russians didn't do such a bad job looking for oil, given the limits of their technology". They also found themselves unable to deal with the absence of law in the "Wild East". German Khan, a major shareholder in BP's Russian partner, described as "certifiably deranged", saw The Godfather as his manual for life, and brought a chrome-plated gun to dinner during a hunting trip with BP executives.
Nevertheless, like Napoleon lured on to Moscow, BP plunged in ever deeper. Paying US$571 million (Dh2.1 billion) for 10 per cent of Sidanco in 1997, it found itself being mulcted of assets. To resolve this situation, it merged its Russian assets with its oligarch partners to form TNK-BP in 2003, a brilliant but perilous deal, which in 2008 saw Robert Dudley, the current chief executive, run out of the country during a shareholder dispute.
The Caspian states have been more promising, but still problematic. The US-inspired construction of a pipeline from Azerbaijan through Georgia to Turkey was a geopolitical masterstroke, bringing the Caucasus into the West's strategic orbit and bypassing both Russia and Iran. Then in the shallow waters of the North Caspian, the largest oil discovery of the last 30 years was made at Kashagan.
Kazakhstan will be one of the main contributors to non-OPEC production growth over the next decade. But predictions that the Caspian would be a "new Gulf" were not borne out.
Instead of a bonanza for outside investors and consumers, the Soviet oil and gas order has been revealed as a vast monolith, at which outsiders can only slowly chip away. This is partly because of the tyranny of geography and partly because of the reassertion of Russian state power by Vladimir Putin, the prime minister. The arrest of Mikhail Khodorkovsky in 2003 was the first step in taming the oligarchs and returning Russia's oil industry to government control.
The post-Soviet transformation has been the source of many of the oil business's most colourful dramas. But the great shifts that were expected to follow - a wholesale reorientation of energy exports from Europe to China, the replacement of the Middle East as the world's petroleum hub, the sidelining of Russia - have not come to pass.
There are no permanent friends in oil geopolitics, but there are permanent interests - which have proved surprisingly durable from Leonid Brezhnev through Mikhail Gorbachev and Yeltsin to Mr Putin.
Robin M Mills is head of consulting at Manaar Energy, and author of The Myth of the Oil Crisis and Capturing Carbon
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The National's picks
4.35pm: Tilal Al Khalediah
5.10pm: Continous
5.45pm: Raging Torrent
6.20pm: West Acre
7pm: Flood Zone
7.40pm: Straight No Chaser
8.15pm: Romantic Warrior
8.50pm: Calandogan
9.30pm: Forever Young
In numbers: PKK’s money network in Europe
Germany: PKK collectors typically bring in $18 million in cash a year – amount has trebled since 2010
Revolutionary tax: Investigators say about $2 million a year raised from ‘tax collection’ around Marseille
Extortion: Gunman convicted in 2023 of demanding $10,000 from Kurdish businessman in Stockholm
Drug trade: PKK income claimed by Turkish anti-drugs force in 2024 to be as high as $500 million a year
Denmark: PKK one of two terrorist groups along with Iranian separatists ASMLA to raise “two-digit million amounts”
Contributions: Hundreds of euros expected from typical Kurdish families and thousands from business owners
TV channel: Kurdish Roj TV accounts frozen and went bankrupt after Denmark fined it more than $1 million over PKK links in 2013
Real estate tokenisation project
Dubai launched the pilot phase of its real estate tokenisation project last month.
The initiative focuses on converting real estate assets into digital tokens recorded on blockchain technology and helps in streamlining the process of buying, selling and investing, the Dubai Land Department said.
Dubai’s real estate tokenisation market is projected to reach Dh60 billion ($16.33 billion) by 2033, representing 7 per cent of the emirate’s total property transactions, according to the DLD.
Skewed figures
In the village of Mevagissey in southwest England the housing stock has doubled in the last century while the number of residents is half the historic high. The village's Neighbourhood Development Plan states that 26% of homes are holiday retreats. Prices are high, averaging around £300,000, £50,000 more than the Cornish average of £250,000. The local average wage is £15,458.
2025 Fifa Club World Cup groups
Group A: Palmeiras, Porto, Al Ahly, Inter Miami.
Group B: Paris Saint-Germain, Atletico Madrid, Botafogo, Seattle.
Group C: Bayern Munich, Auckland City, Boca Juniors, Benfica.
Group D: Flamengo, ES Tunis, Chelsea, (Leon banned).
Group E: River Plate, Urawa, Monterrey, Inter Milan.
Group F: Fluminense, Borussia Dortmund, Ulsan, Mamelodi Sundowns.
Group G: Manchester City, Wydad, Al Ain, Juventus.
Group H: Real Madrid, Al Hilal, Pachuca, Salzburg.
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
Kanguva
Director: Siva
Stars: Suriya, Bobby Deol, Disha Patani, Yogi Babu, Redin Kingsley
A MINECRAFT MOVIE
Director: Jared Hess
Starring: Jack Black, Jennifer Coolidge, Jason Momoa
Rating: 3/5
We Weren’t Supposed to Survive But We Did
We weren’t supposed to survive but we did.
We weren’t supposed to remember but we did.
We weren’t supposed to write but we did.
We weren’t supposed to fight but we did.
We weren’t supposed to organise but we did.
We weren’t supposed to rap but we did.
We weren’t supposed to find allies but we did.
We weren’t supposed to grow communities but we did.
We weren’t supposed to return but WE ARE.
Amira Sakalla
The White Lotus: Season three
Creator: Mike White
Starring: Walton Goggins, Jason Isaacs, Natasha Rothwell
Rating: 4.5/5
Specs
Engine: Dual-motor all-wheel-drive electric
Range: Up to 610km
Power: 905hp
Torque: 985Nm
Price: From Dh439,000
Available: Now
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MATCH INFO
Uefa Champions League, last-16. first leg
Atletico Madrid v Juventus, midnight (Thursday), BeIN Sports
Britain's travel restrictions
- A negative test 2 days before flying
- Complete passenger locator form
- Book a post-arrival PCR test
- Double-vaccinated must self-isolate
- 11 countries on red list quarantine
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