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Chechnya's Kadyrov, Rosneft Again At Odds

Rosneft boss Igor Sechin (left) and Chechen leader Ramzan Kadyrov pose during a meeting in April.
Rosneft boss Igor Sechin (left) and Chechen leader Ramzan Kadyrov pose during a meeting in April.

The long-standing feud between Chechen Republic head Ramzan Kadyrov and Russian state-controlled oil company Rosneft has taken a new turn.

Last week Kadyrov criticized Rosneft in an Instagram post for having allegedly gone back on its commitment to build a bitumen plant in Chechnya. Rosneft swiftly rejected that accusation, recalling that in June it commissioned at a cost of 8.46 million rubles ($143,941) a feasibility study for the plant that is to be completed by the end of the year.

Rosneft's offer earlier this year to build a bitumen plant in Chechnya was intended to compensate for its decision not to go ahead with construction of an oil refinery in Grozny for which Kadyrov had reportedly been lobbying single-mindedly for years. Kadyrov, for his part, rejected as inflated and ridiculous the price of 12.5 billion rubles that Rosneft was demanding for handing over to Chechen ownership its fixed assets in Chechnya plus its 51 percent stake in the Rosneft subsidiary Grozneftegaz, which extracts some 300,000 tons of oil annually.

At that juncture, the Financial Times described the tensions between Kadyrov and Rosneft head Igor Sechin as posing a greater threat to Russian President Vladimir Putin than does opposition leader Aleksei Navalny. The paper quoted an unnamed "person close to Rosneft" as calling for investigating the possibility of Chechen involvement in the April 3 bomb attack in St. Petersburg that killed 14 people.

Kadyrov and Sechin responded immediately with a joint statement rejecting any Chechen involvement in that bombing and stressing that their business and personal relations over many years are based on mutual respect. They said they always sought a constructive solution to any problems that arise in the course of their cooperation.

Meeting later in April, Kadyrov and Sechin reached a compromise agreement under which Rosneft will retain its assets in Chechnya but invest an undisclosed sum in social infrastructure, the news portal Caucasian Knot reported. No further details of any such investment have yet emerged.

The capacity of the planned bitumen plant is not known. Neither is it clear, as Russian economist Natalya Zubarevich pointed out to RFE/RL's North Caucasus Service, who will be the formal owner or who is likely to invest in the construction of the plant.

Other economic commentators had earlier questioned whether the plant would prove viable; they suggested that given that limited demand in Chechnya for bitumen products for highway construction, it would be cheaper to buy them elsewhere and transport them to Chechnya.

Consultant Shamil Beno has expressed concern over the anticipated negative ecological impact of a bitumen plant. At the same time, he suggested that given the level of unemployment in Chechnya, which independent economists estimate at far higher than the official figure of 14.3 percent, investment of any kind is desperately needed.

But most investors are, understandably, reluctant to invest in Chechnya in light of Kadyrov's brutal and unpredictable leadership style. And some factories that have been built over the past 10-15 years are either standing idle or do not generate a profit, Kadyrov complained during a meeting last week with Prime Minister Abubakar Edelgeriyev.

(The views expressed in this blog post do not necessarily reflect those of RFE/RL)

About This Blog

This blog presents analyst Liz Fuller's personal take on events in the region, following on from her work in the "RFE/RL Caucasus Report." It also aims, to borrow a metaphor from Tom de Waal, to act as a smoke detector, focusing attention on potential conflict situations and crises throughout the region. The views are the author's own and do not represent those of RFE/RL.


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