Rosneft's Sechin marks rise of Kremlin as oil power

Reuters News
Posted: Oct 18, 2012 2:07 PM
Rosneft's Sechin marks rise of Kremlin as oil power

By Steve Gutterman

MOSCOW (Reuters) - From darkness into the limelight, Igor Sechin's emergence from the Kremlin shadows to run one of the world's great oil firms reflects how Vladimir Putin has used energy resources to recover influence Moscow had lost with the collapse of the Soviet Union.

Mysterious Cold War-era activities in Africa and substantial blanks in his biography preceded Sechin's arrival in the Kremlin in 2000 when Putin became president; even then, as deputy chief-of-staff to the former KGB officer, Sechin kept such a low profile that Russian media dubbed him "Darth Vader".

Yet after years working behind the scenes to wrest control of Russia's oil riches from "oligarchs" like the now jailed Mikhail Khodorkovsky, he is lately installed as chief executive of state-owned Rosneft and stands on the verge of a takeover of BP joint venture TNK-BP that will consolidate Putin's grip on the industry and make Sechin one of the world's top oilmen.

Now 52, his move from "grey cardinal" enforcing Kremlin power on the tycoons who had grabbed Russia's resources in the free-for-all of the 1990s has not always been smooth. Pushed out of the Rosneft chairmanship last year by another Putin protégé, then president Dmitry Medvedev, it was only on Putin's return as head of state in May that Sechin returned to the firm, appointed CEO at Rosneft just a day after a new cabinet had been formed.

On Thursday, he was in London for talks on a deal for control of TNK-BP, a joint venture between BP and four Soviet-born billionaires who have agreed to sell their half of a company valued at over $50 billion. The British oil company might also sell out its stake.

A deal would further the march of Kremlin capitalism and Putin's drive to repair what he has called the "geopolitical catastrophe" of the Soviet collapse by using control of energy resources to further Russia's interests internationally.

Sechin has been at his side all the way.


The most prominent loser in the struggle, imprisoned tycoon Khodorkovsky, blames Sechin for masterminding the demise of his firm, Yukos, which was bankrupted by tax claims. Once Russia's largest oil company, Yukos's main production assets went to Rosneft, which now holds the No. 1 ranking in the sector.

In the case of TNK-BP, the sidelining of the tycoons comes in a confrontation that has less painful consequences for them - and is more costly for the Kremlin, in financial terms at least.

If completed, it will be the latest in a series of coming-out parties - some successful, others less so - at which Sechin has chaperoned Rosneft as it has emerged as national champion.

While serving as a deputy prime minister, before his return to Rosneft as CEO, Sechin struck exploration deals this year with Exxon Mobil, Statoil of Norway and Italy's Eni. Those partnerships seek to develop Rosneft's vast offshore reserves and secure a foothold abroad that would help it acquire know-how in extracting hard-to-recover 'tight' oil - trapped in non-porous rock - from its fields in Siberia.

Industry sources say Sechin cleared the way by convincing Putin to back a new tax regime that encourages firms to invest.

Yet Sechin's aim has also been imperfect. A $16 billion BP-Rosneft share swap agreed in January 2011, with Putin's blessing, collapsed under the weight of opposition from the AAR tycoons who own half of TNK-BP.

But the history of deals underscores both Sechin's standing near the centre of Putin's circle and his emergence into a more public role as the Kremlin looks abroad for influence, investment and much-needed know-how for its oil industry.

The spotlight was once an unlikely place for Sechin, whose ties with Putin go back to a meeting during a trip to Brazil in the early 1990s and their work together in the St. Petersburg mayor's office before President Boris Yeltsin plucked Putin from obscurity to become his anointed successor in the Kremlin.


Sechin's official biography consists of seven short lines, one taken up by saying he owns no shares in Rosneft. It says nothing about what he did between graduation from Leningrad State University in 1984 and 2000 when he became deputy chief of Putin's presidential staff.

Even that elevation did not bring much limelight. Russian newspaper editors once complained of having not a single photograph of Sechin. It earned him the nickname "Darth Vader".

That seemed appropriate for a man seen as a leader of the "siloviki" - a label derived from the word for "force" and applied to a cluster of officials drawn from military or intelligence backgrounds. Their prominence under Putin, a long-time KGB officer, has been accompanied by Russian criticism of the West and belief in a strong state role in the economy.

Sechin's life in Soviet times is shrouded in secrecy, beyond a few tantalizing brushstrokes. Fluent in Portuguese, he worked as a military translator in Angola in the 1980s and in Mozambique with a shadowy Soviet trade body called Tekhnoexport.

The gaps have led to speculation about what he might have done in the final decade of the Cold War, when Portugal's former colonies in southern Africa were proxy battlefields.

His move to more public role, however, may have made him less shy of media coverage. Russian state television recently showed Sechin making a field visit in Venezuela; a hard hat on his graying hair, his cheek was marked by a smear of oil.

(Editing by Alastair Macdonald)