Russia's oil and gas reserves are just too big for the world's oil companies to ignore, says Wood Mackenzie senior analyst, Russian and Central Asia energy research, Hilary McCutcheon. Those that supply European consumers in particular cannot. But just how willing are they to deal with the political and financial control Russia has over its reserves? Apparently, quite willing. Contract negotiations with Russian authorities are part of the "long game" of dealing with Russia, McCutcheon says. Many companies are willing to ride out the tough times in the hopes of gaining good reputations in the region and getting access to more deals down the line. Many U.S. companies set up shop in Russia during the low-priced oil days of the 1990s, when the former Soviet Union was trying to stabilize its economy and anxious for foreign investment. Foreign companies showed up with blank checks ready to buy assets, but with the growing power of its state-owned hydrocarbon companies, Russia can now better dictate the terms of deals, McCutcheon says. "It's not always in the (foreign) companies' control," she says. "They can't just say, 'I like that field.' Now it's, 'I'm here, and here are my strengths.'" For more on this, see the May issue of Oil and Gas Investor. For a subscription, call 713-260-6441.

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