Rosneft to open gas stations in South Ossetia: experts call the decision “grotesque”

Rosneft, the biggets Russian oil company, publicised its plan to open gas stations in South Ossetia. According to reports, the agreement was reached between Anatoly Bibilov, South Ossetian president, and Igor Sechin, Rosneft’s CEO at a meeting in Moscow. It is being emphasized that, prior to this, Bibilov had a meeting at a higher level with the Russian president Vladimir Putin.

The South Ossetian president made a beat-up statement on the occasion: “We hope that Rosneft in South Ossetia will solve problems with low quality fuel and untimely deliveries.”

According to the presidential press service, Rosneft experts are expected to come to South Ossetia in the next two weeks to work out a plan on the construction and functioning of gas stations.

At the same time, Russian experts fail to understand why the decision to open gas stations in a small country should be taken by the president. Moreover, the benefits from the deal are not clear for Rosneft.

Political expert Vladimir Novikov, when interviewed by Echo of the Caucasus, drew a comparison to Abkhazia.

“Rosneft has an affiliated enterprise in Abkhazia and owns oil and gas fields there. There is nothing of the kind in South Ossetia. Potential profits from gas trading also look doubtful,” Novikov says. “With a population of 50 000, the market is too small. Abkhazia`s population, by comparison, is 200 000.”

His version is that the deal, intently made at such a high level, was primarily needed to boost Anatoly Bibilov`s image. “It is for all to see that he met with a high-level official in charge of a major company.”

Alexander Karavaev from the Russian Academy of Sciences Economics Institute points out another aspect of the story. “It may serve as a supplementary channel for unobtrusive financing of South Ossetia,” he said in an interview with Echo of the Caucasus.

“Expenses on construction of the gas stations and infrastructure will be overestimated and then distributed among the so-called ‘chosen ones’, thus creating another source of financing both for the budget and the local elite.”

“For instance, some very expensive projects in the Gulf monarchies are considered normal, though the expenses are overestimated too and meant to boost their image… Why not use Rosneft as a donor to help develop South Ossetia? Gas stations with toilets, shops and other services will make South Ossetia more attractive for tourists.”

Alexander Karavaev also believes the project may help improve the transport infrastructure,  a step towards launching a transit corridor through Georgia.

In May 2017, a criminal case was brought against the manager of Yugosetnefteproduct – the monopolist supplier of gas for manipulation.

The following scheme was used: gas from a well-known Russian brand supplied to Vladikavkaz was diluted there and then supplied to Tskhinval.

Since 2014, the state owned Yugosetnefteproduct has been the licensed importer of oil products from Russia to South Ossetia – contracted by Rosneft.

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