A Russian Investment That Ends Up in the Courts Not in the Money: The Case of Black Sea Energy Ltd
Bibliographic record
Abstract
THE CASE OF BLACK SEA ENERGY LTD. It was early 1996 when international financier Robert Friedland, renowned for pocketing an estimated $500 million for his interest in Canada's Voise Bay giant nickel deposit, pitched a proposal to start a business in Russia's giant, but declining oil industry. 'At the time, it would be fair to say dispassionately that investing in Russia was chic' says Friedland, speaking from his private company's world headquarters in Singapore, where he oversees an intricate network of ventures in developing countries (Cattaneo, 1998). Robert Friedland went ahead and formed Black Sea Energy Ltd. Originally, the Canadian firm focused exclusively on the initiation, rehabilitation, exploration, and development of major oil properties in Russia, where the company's objective was to become one of the most significant foreign oil producers (CNW, 1997). To this end, Black Sea Energy Ltd. formed a joint venture, the Tura Petroleum Company, with Tyumenneftegaz, a subsidiary of Tyumen Oil Co., Russia's fourth largest integrated oil company in 1996. Since Tyumen Oil Co. was 90 percent owned by the state and 10% by the employees, Black Sea Oil negotiated the joint venture directly with the central Russian government. Each member in the joint venture agreed to contribute about USD 50 million. Black Sea Energy's contribution was to be made in the form of cash, new and expertise currently unavailable to Tyumenneftegaz. This new makes it possible to increase the production of established oilfields. Russian partner's contribution consisted of infrastructure projects and the licenses for the oil and gas production of the Tura oilfield in western Siberia. The deal was attractive because of the field's impressive oil reserves, its link to the Trans-Siberian pipeline..., and because of its large potential for incremental production through the use of Canadian oilfield technology (Cattaneo, 1998). In the last decade, Russia has been generally considered to be a risky place to invest. major risks for foreign investments stem from frequent changes in government. These changes in government lead to frequent and unpredictable changes in laws and taxes. commercial legal framework is not well developed and private property is not well protected. Even if laws are on the books, they are often not enforced. There is frequent disagreement on the jurisdiction for different decisions between different ministries as well as different levels of government. In legal disputes, Russian courts tend to favor local firms over foreign businesses. For these reasons, the big oil firms had no investments in Russia at the end of 1996 with only the small and independent oil firms doing business in Russia. Small Canadian firms were well placed to enter the Russian market, because of their technological depth, ability to operate in cold climates, and expertise in different geological settings. In addition to the technical expertise, Clint Hussin, the president of Black Sea Energy in 1996, had more than 10 years of experience in the oil industry in Russia. He had successfully negotiated five joint ventures for Fracmaster, the largest foreign oil producer in Russia in 1996. Therefore, the firm felt that it could be successful in Russia. Black Sea Energy Ltd. proceeded with an initial public offering after the joint venture deal was finalized. company raised USD 80 million by issuing 23.8 million common shares at a price of USD 3.35 per share. On June 11, 1997 the shares began trading on the Toronto Stock Exchange at CAD 4.65. By August 1998 the share price had dropped to CAD 0.12. What had happened? Operationally, the investment was very successful. With the use of western provided by Black Sea Energy, production at the Tura field went from about 4000 barrels/day to nearly 12,000. Financially, there was a significant drop in oil prices in 1998, combined with high Russian taxes on oil exporting firms, which caused a poor performance of the joint venture in 1998. …
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How this classification was reachedexpand
Full frame distilled prediction
Teacher imitationNot calibrated prevalence, not ground truth. Human validation pending. Learned from the 10,348 direct Codex labels and 10,348 direct Gemma labels. Candidate is the union of thresholded teacher heads; consensus is their intersection. These outputs are machine_predicted_unvalidated and are not human labels or direct frontier model labels.
Codex and Gemma teacher scores by category
| Category | Codex | Gemma |
|---|---|---|
| Metaresearch | 0.003 | 0.000 |
| Meta-epidemiology (narrow) | 0.000 | 0.000 |
| Meta-epidemiology (broad) | 0.000 | 0.000 |
| Bibliometrics | 0.000 | 0.000 |
| Science and technology studies | 0.000 | 0.001 |
| Scholarly communication | 0.000 | 0.000 |
| Open science | 0.001 | 0.000 |
| Research integrity | 0.000 | 0.000 |
| Insufficient payload (model declined to judge) | 0.000 | 0.000 |
Machine scores (provisional)
The two teacher heads of the student model, read on this work. A score orders the frame for review; it never asserts a category, and the validation status ships verbatim with every row.
Baseline scores from an immature model (maturity gate not passed, 7 training rounds). Scores rank; they never assert a category.
score_only:v0-immature-baseline · verbatim from the scoring run: score_only means the number may rank works, and no category label ships from itClassification
machine, unvalidatedMachine predicted; a candidate call from one teacher head, not a consensus.
How this classification was reached, model by model and score by score, is at the end of the page under "How this classification was reached".