Energy reforms and foreign direct investments in energy projects in the Commonwealth of Independent States (CIS)
by Klaus Brendow
International Journal of Global Energy Issues (IJGEI), Vol. 7, No. 5/6, 1995

Abstract: Short-term (1 to 4 years) foreign direct investments (FDI) in energy projects in the Commonwealth of Independent States (CIS) amount to $11-13 billion, with prospects for longer-term investments of the order of $110 billion. Contracts concentrate on Russia and Kazakhstan, oil and gas development and joint ventures and production sharing agreements, while equity participation of foreign investors is not common due to legislative restrictions. The amount of the short-term commitments in energy projects represents twice the amount of total FDI and ten per cent of the long-term capital needs of CIS-countries necessary to modernize their energy systems and use. While this ratio appears to strike a fair balance between the immediate needs for capital and technology transfer, the focus on oil and gas and the resource-rich CIS-nations gives rise to concerns as it cements the traditional pattern of energy development and relations in the former USSR and even enhances tensions inherent in such development. Under these circumstances, innovative approaches to attracting and re-directing FDI towards demand-side projects and projects in conversion and efficient use should be more actively pursued, including through a service-oriented investment promotion effort of CIS project managers in the main financial and business centres of the world.

Online publication date: Tue, 15-Jul-2014

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