Goldman Sachs dumps on Alaska while investing in Russian Arctic oil – Must Read Alaska

Posted: December 20, 2019 at 6:51 pm


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While Goldman Sachs, one of the largest investment enterprises in the world, has caved to radical environmentalists by saying the company wont invest in Alaskas Arctic oil, its investing heavily in oil development in the Russian Arctic.

Goldman Sachs, in fact, is investing in unregulated dirty oil.

[Read: Goldman Sachs redlines Alaska]

The bank is pouring its resources into the independent Irkutsk Oil Company, known as INK. Along with the European Bank for Reconstruction and Development, Goldman Sachs is a minority shareholder in INK, which operates the Yarakta oil field in Irkutsk, as well as in Republic of Sakha (Yakutia) in Siberia.

In Russia, environmental laws are merely suggestions. There is little enforcement and the industry is notorious for leaks, spills, and contamination, especially in far-flung Siberia. Corruption is just a cost of doing business in Russia, and Goldman Sachs is a party to that system of doing business, and the U.S. government cant do a thing about it.

INK is not subject to the U.S. sectoral sanctions that apply to Russias biggest energy firms and which place restrictions on the type of financing they can attract from Western creditors. INKs minority shareholders include Goldman Sachs and the European Bank for Reconstruction and Development (EBRD), according to a report from Reuters in April.

[Read: Upstart Russian oil company with Goldman Sachs backing]

Goldman Sachs Internationalhas a 3.75 percent stake in INK, which works in both the Irkutsk region and the Republic of Sakha (Yakutia) in eastern Siberia.

INK told Reuters that it plans to invest $3-4 billion into the Arctic oil field over the next three years, and develop more of its gas business with four new processing plants.

Building up the Russian oil industry while taking a pass on Alaskas Arctic is just another calculation on profitability for Goldman Sachs. But its decisions, profitable as they may be, have global consequences, both environmentally and geopolitically.

Earlier this year, when Irans oil was cut off from Syria by the impounding of an Iranian tanker, the war-torn country looked to Russia for help.

Analysts predicted the move would make Syrian President Bashar al-Assad even more dependent on Moscow and less able to withstand Russian demands. Russian oil, then, makes Russia more influential in that war-torn region of the Middle East.

The Kremlin has sought to wield the main influence over Syria and reap geo-strategic and business benefits from its military intervention in the eight-year Syrian war and its propping up of the Assad government, according to Voice of America.

[Read: Goldman Sachs-backed Russian oil firm plans expansion]

Goldman Sachs has a history of making deals with some of the worlds biggest polluters and baddest political actors. People like Moammar Qaddafi in Libya.

[Read: Hot Mess: How Goldman Sachs lost $1.2 billion of Libyas money]

According to Goldman Sachs oil analyst Michele Della Vigna, theres still money to be made in Big Oil. In our view, the first wave of final investment decisions will likely take the form of brownfield developments with quicker payback, particularly in West Africa, the Gulf of Mexico and the North Sea. We should see a strong recovery in the number of projects in 2019 and 2020, led by Big Oils deepwater and liquefied natural gas investments. We expect roughly $120bn in LNG projects during those two years as the industry catches up with the production gap resulting from four years of low investments and strong underlying demand, she said, in a Goldman Sachs publication.

In other words, the company is still investing in oil. But its investing in other countries, where regimes are corrupt and environmental organizations dont have influence.

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Goldman Sachs dumps on Alaska while investing in Russian Arctic oil - Must Read Alaska

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December 20th, 2019 at 6:51 pm

Posted in Investment