Business
Trump and Putin hint at US-Russia trade revival, but business environment remains hostile
Russian President Vladimir Putin holds a meeting with members of Russia’s business community at the Kremlin in Moscow, Russia on May 26. (AP)
WASHINGTON, May 31, (AP): Hundreds of foreign companies left Russia after the 2022 invasion of Ukraine, including major US firms like Coca-Cola, Nike, Starbucks, ExxonMobil and Ford Motor Co. But after more than three years of war, President Donald Trump has held out the prospect of restoring U.S.-Russia trade if there’s ever a peace settlement.
And Russian President Vladimir Putin has said foreign companies could come back under some circumstances. “Russia wants to do largescale TRADE with the United States when this catastrophic ‘bloodbath’ is over, and I agree,” Trump said in a statement after a phone call with Putin. “There is a tremendous opportunity for Russia to create massive amounts of jobs and wealth. Its potential is UNLIMITED.”
The president then shifted his tone toward Putin after heavy drone and missile attacks on Kyiv, saying Putin “has gone absolutely crazy” and threatening new sanctions. That and recent comments from Putin warning Western companies against reclaiming their former stakes seemed to reflect reality more accurately – that it’s not going to be a smooth process for businesses going back into Russia.
That’s because Russia’s business environment has massively changed since 2022. And not in ways that favor foreign companies. And with Putin escalating attacks and holding on to territory demands Ukraine likely isn’t going to accept, a peace deal seems distant indeed. Here are factors that could deter US companies from ever going back: Russian law classifies Ukraine’s allies as “unfriendly states” and imposes severe restrictions on businesses from more than 50 countries.
Those include limits on withdrawing money and equipment as well as allowing the Russian government to take control of companies deemed important. Foreign owners’ votes on boards of directors can be legally disregarded. Companies that left were required to sell their businesses for 50% or less of their assessed worth, or simply wrote them off while Kremlin-friendly business groups snapped up their assets on the cheap.
TWO of the biggest American oil companies, ExxonMobil and Chevron, are locked in a legal battle over an oilfield in Guyana. Both companies are industry giants and pioneers with a presence in oil fields worldwide. They have their hands in every oil field, regardless of location. Oil is their bread and butter. They are the biggest in the field with unmatched expertise. Today, however, they find themselves in a legal battle in a London court over the ownership of a massive oil project, estimated to hold over$1 trillion in reserves. The outcome of this case carries huge implications for the global oil industry. The two U.S. oil supermajors are battling over a 30 percent stake in a major oil field in Guyana, which is currently owned by Hess Corporation, a U.S. energy company that agreed to a $54 billion takeover by Chevron in 2023.
ExxonMobil, which already owns approximately 45 percent of the same field, claims it holds a “first right of refusal” under its existing agreement. This is likely to be a long legal battle over a valuable oil reserve, which is what every oil company wants. The fight between the world’s two biggest oil firms could shape the future of the industry. Whoever wins will strengthen their position in the global market. For ExxonMobil, the most valuable American oil company, winning could help it stay on top. The two oil companies are no match for national oil companies in terms of oil reserves, nor do they possess as much oil as those state-owned companies.
However, they do have the know-how, the experience, and the technology to operate in almost any oil field in the world. They are always in desperate need of more oil reserves and will go anywhere, to any place, in search of a few barrels of black gold. It is their bread and butter. For Guyana, with its small population and clean environment, there is no real need for the polluting effects of black oil to disrupt its natural surroundings. However, the financial rewards are too great to ignore, offering the country a chance to place itself on the global energy map. With oil reserves exceeding 12 billion barrels, and more expansion on the horizon, Guyana stands to gain immensely. The current legal battle between the two oil giants is over a prize worth more than $1 trillion. In the end, Chevron has more at stake and a greater need to win, as it aims to boost its oil reserves to better compete with the world’s leading oil company, ExxonMobil. It is a matter of competition and narrowing the gap with its top rival. Without a doubt, this is a case well worth fighting for.
By Kamel Al-Harami
Independent Oil Analyst
Email: [email protected]
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