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| Opportunities & Exposures: Industry |
Unlocking Siberia’s Secret
David Zaikin
04/01/2006
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We do not flatter ourselves; our company is not big enough to
worry about butting heads with the Putin administration. But we admit it is
safer to do business in Russia when we have political support from someone
allied with Kremlin policy. We also find it essential to make friends in the
area where we operate. Regional governors have lost some of the independence
they enjoyed under Boris Yeltsin’s presidency, but still exercise significant
sway over what happens locally.
As outsiders in Siberia, we have found that the best way to
obtain political support is through the help of knowledgeable locals. To start
drilling, we needed signatures from approximately 60 different governmental
organizations and the goodwill of some 400 bureaucrats and landowners.
Our local partners knew how to approach the necessary parties. But we also
had to show the locals that we could be valuable corporate citizens. We are
exploring in the Kurgan region, which is now 75 percent agricultural. But during
the Cold War it served as a stockpile for chemical weapons and was closed to all industries except
military production between 1943 and 2001. We have made a commitment to create
economic growth there, and to paying taxes. Unlike some competitors, we
registered our local operating company in the region rather than in a tax haven
such as Cyprus. This is a move that adds surety of title to our assets. Giving,
we hope, is receiving. Art by Matt Mahurin.
David Zaikin is chairman and
CEO of New York—based
Siberian Energy Group. |  |
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