| Russia holds some of the largest oil and gas reserves in the world and annually constructs more pipeline than any other country in the world. However, changing to a free market society has brought a significant interest from western oil producers. The change to a free market has been slow and as a result western interests face a difficult task developing Russian oil reserves. Political, financial, cultural and logistical factors hinder progress. The lack of consistent laws and regulations have created problems within the government body that approve Production Sharing Agreements (PSA's). The lack of uniform PSA's create financial inequalities that make foreign investment unattractive. Culturally, Russians are wary of westerners and in some cases believe that western oil companies are exploiting the country's resources. Logistically, productive fields are located in sparsely populated areas. Equipment, materials and adequately trained labor forces are not always easily procured locally, resulting in high transportation costs.;The risk associated with oil and gas exploration and production characteristically is high, and typically costs are clearly known. In Russia these costs are not altogether known, creating additional risk. The purpose of this thesis is to identify those risks and conduct a comparative assessment to western companies. |
