Vladimir Putin views energy assets as his predecessors once regarded nuclear warheads. They are the means of advancing Russia’s strategic ambitions in the world. (Ironically, George W. Bush, the first MBA president, has not used Corporate America but the Pentagon to define his foreign policy; Mr Putin, the former KGB agent, has sought to advance his international agenda by relying on the soft power of Russia’s big business and natural wealth.) President Putin seems to want Russia to maintain majority control of its oil and gas industry. Such economic nationalism is not new. What has changed is that, courtesy of a higher oil price, Russia is no longer as reliant as it once was on foreign investors to explore and develop oil and gasfields.

Shell is not the only one that will have to deal with this new reality. ExxonMobil has been sent the same message on its Sakhalin investment: scale back costs or sell out. BP may find it comes under pressure to renegotiate terms of the BP-TNK joint venture.

But given that Russia has shown both the will and the werewithal to regain control of its natural resources, Shell’s decision last year to double the projected costs of developing the Sakhalin-2 field from $10 billion to $20 billion played into the Kremlin’s hands. Not only did it infuriate Moscow, but it gave Mr Putin at least a rhetorical cause for rewriting the rules of the contract retrospectively.

To be clear, Mr Putin likes to abide by the laws of global capitalism as and when it suits him. Just a week ago he was in France complaining that a Russian company’s 5 per cent investment in EADS should guarantee it a seat on the European aerospace and defence manufacturer’s board. He is ripping up commercial contracts on the one hand, championing investor rights on the other. But Shell’s business is geopolitical. Its job is to handle government relations. Jeroen van der Veer, its boss, seems to have done a worse job of handling the arbitrary Mr Putin than BP’s Lord Browne of Madingley has done of placating the more irascible members of the US Congress.

Funds at risk

WITH so much money piling into private equity this year, the funds started to look like Texan steaks — extraordinarily large, but not necessarily healthy. Investors have just begun to show signs of indigestion: Doughty Hanson has just pulled a £600-million listed fund issue after a roadshow failed to stir enthusiasm among jaded fund managers.

They have reason to be cautious. Buyout bids have regularly become auctions as dealhungry rivals cluster round, as at BAA or AB Ports. Even at AWG, counter offers to this week’s seemingly high-priced agreed bid for the water group would come as no surprise.

It is no wonder some pension fund professionals are asking themselves whether they are likely to earn above-average returns from this alternative form of investment. Doubters are looking at the European industry statistics as a whole. The average return over 30 years is a splendid 10.3 per cent. But the median return is only 0.5 per cent. This means that nearly half of the funds, particularly smaller also-rans, lost money. Private equity has been a Klondike like any other. A handful of prospectors make a fortune; more than half don’t.

The huge sums raised by private equity firms mean that there is an estimated £500 billion seeking deals. All but a handful of FTSE-100 companies could now be taken into private hands.

Meanwhile, scores of smaller firms are suffering. Guy Hands of Terra Firma warns of troubles ahead. He frets about over-complex deals that could implode and about private equity funds buying into quoted companies.

In private equity, the gap between the powerful and the hopeful is widening.

Net profits

ONLINE advertising now accounts for just over 10 per cent of ad spending in the UK. The Internet Advertising Bureau forecasts that by the end of the year, online ads will account for a bigger share of the national advertising market than newspapers. Not everyone is flocking online: retailers and consumer goods companies are showing an abiding faith in the power of television. But online advertising is maturing into a mainstream industry. The fastest growth comes not from paid-for search ads, but display advertising. A multibillion- pound online advertising sector is the precondition for building durable internet businesses. Their defining qualities will not be so different from the established media: authenticity of content, reliability of audience, quantity and quality of market share. And by the time online closes in on TV, convergence will have happened.

• The possibility that Sir Philip Green is to lose Jane Shepherdson from Top Shop is much more troubling than the recent fall in profits at Bhs. Top Shop is the standout success in Sir Philip’s retail empire. The store is not just a hit on the high street, it has “buzz” in Hollywood. Ms Shepherdson has been the force behind that brand. Drapers magazine has deemed her the most powerful woman in British retailing. She has been at Top Shop her entire career — Sir Philip should do everything that he can to keep her there.

Times Recommends

• B&B shareholders forced into funding rescue
• John Lewis department store sales plunge 8.3%
• Families turn to credit to cover mortgage bills