Russian Energy Firm Looks To Develop Crimea's Oil And Gas Sector

Russian state-owned energy company Gazprom has proposed to develop Crimea’s oil and gas sector, Crimea’s first deputy prime minister Rustam Temirgaliev said Tuesday, according to Russian news agency RIA.

"Of course, Gazprom was the first to approach us [with a proposal]," Temirgaliev said.

The Crimean official was asked if any Russian companies had proposed to develop the Ukrainian region’s oil and gas industry. Crimea declared its independence and applied to join Russia on Sunday, after a hastily-organized vote under the surveillance of Russian troops.

Temirgaliev said on Friday that Crimea may sell Ukrainian energy company Chornomornaftohaz to a Russian company “like Gazprom,” Interfax news agency reported.

"After nationalization of the company we would openly take a decision - if a large investor, like Gazprom or others emerges - to carry out [privatization]," Temirgaliev said.

He had said earlier last week that Crimea would take ownership of Ukrainian state companies on its territory, including natural gas fields in the Black Sea.

“It seems like an obvious strategic approach,” Michael Peterson, managing director of energy research at MLV & Co, said. “It binds them with Russia, it stabilizes business… and lastly it will likely give them some amount of inbound capital.”

Peterson believes Russia’s motive to annex Crimea is political rather than economic.

“My sense is that Russia needs to get their international pride back,” he said. “I think the Russians are using this as an opportunity to say they are formidable and need to be respected.”

Capital Economics Emerging Markets Economist Liza Ermolenko said Russia will not profit economically by seizing Crimea. She also pointed out that Putin's approval rating in Russia has climbed above 70 percent this year.

“It’s more about politics than anything,” she said. The Crimean annexation is “definitely going to be a cost added to the [Russian] budget.”

The U.S. and Europe imposed financial sanctions against Russia on Monday. On Tuesday, Russian president Vladimir Putin declared his intention to annex Crimea into the Russian Federation and signed a draft treaty with Crimean leaders.

“Crimea has always been an integral part of Russia in the hearts and minds of the people,” Putin said.