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State Department reverses decision, clears way for Russian oil loan Five hundred million dollars will buy equipment from 25 U.S. companies, including Halliburton, for Tyumen Oil Harry Dunphy Associated Press Writer
The State Department lifted its objections March 31 to loans that would help Russia’s oil industry, clearing the way for $500 million in loans to buy equipment from American companies. The ban had been imposed last December amid heavy fighting in Chechnya.
Department spokesman James P. Foley said it was a coincidence that Secretary of State Madeline Albright acted just days after Vladamir Putin was elected Russia’s new president. Putin has pledged to bring order to the country and wants to create a favorable climate for foreign and domestic investment.
Foley said Albright’s March 31 decision came after an “extensive and deliberative process to ascertain the facts and asses how circumstances were changing” since she decided Dec. 21 to halt U.S. Export-Import Bank guarantees of loans to Russia’s Tyumen Oil Co.
At that time, administration officials denied her decision was related to strong U.S. objections to Russian military action against Chechen rebels, although it came amid calls for a halt to such loans from members of Congress and presidential candidates.
Lawmakers also had called for the bank to stop the loans to Tyumen because of reports it forced a company with partial American ownership into bankruptcy to obtain the giant Samotlor oil field in western Siberia.
Blocking loans forced privatization Foley said Albright’s action to block the loans had a tonic effect, noting that Tyumen, then partially owned by the Russian government, has since been successfully privatized. He said the company, known as TNK, has begun negotiating with shareholders and creditors of bankrupt companies involved in the transaction.
In Moscow, TNK president Simon Kukes said the decision would create thousand of American and Russian jobs.
“Broadly speaking, these projects will also help integrate Russia even further into the world economy,” Kukes said. The loans are to be used for upgrading Tyumen’s refinery near Moscow and for rehabilitating the Siberian oil field.
“TNK is grateful that the State Department’s in-depth review has confirmed that we have followed the rule of law, which we agree is crucial in Russia and which we always strive for,” Kukes said.
Foley said the United States has “opened a dialogue with Russia to impress on them the need to address weaknesses in their legal system that led to abuses in this case.”
He said the decision on Tyumen “does not mean that all our concerns about the protection of investor and creditor rights, and the rule of law, in Russia have been addressed. It’s obviously a work in progress.”
Administration invoked law to block loans Before blocking the loan last year, Albright held an unusual meeting with Ex-Im Bank Chairman James Harmon to try to persuade the bank, an independent federal agency, to block the loan on its own. Later, she sent a letter to the bank formally invoking a law that allows the administration to intervene in its decisions “in the national interest.”
The loans would be extended by private banks, with Ex-Im guarantees. Proceeds would go to Halliburton Co. of Dallas and 24 other U.S. companies in payment for U.S-made oil and gas equipment and services to be purchased by the Russians.
The bank had recommended approval of two loans for Tyumen to bolster Russia’s oil industry: $295 million for oil field services and $203 million in engineering and services for upgrading the refinery.
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