Exxon, Rex, and Russia: A Deep Drilling

Rex Tillerson, the former CEO of ExxonMobil and recipient of Russia’s Order of Friendship, has become our new Secretary of State. I took a deep dive into the archives, and, like all the amateur Kremlinologists and power-hungry oilmen who’ve tread this ground before me, I’ve learned that the deeper you drill, the bigger the risk. Stop somewhere around point #10 if you start to feel like you’re on shaky ground, or like you’re one nesting matryoshka doll short of a shell company.

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1. In the summer of 2015, The Union of Concerned Scientists published a series of reports on what are known as The Climate Deception Dossiers—internal fossil fuel industry memos which reveal that “for nearly three decades, many of the world’s largest fossil fuel companies have knowingly worked to deceive the public about the realities and risks of climate change.”

2. In late 2015, InsideClimate News published a multi-part investigation of Exxon’s role in the cover-up. The series “describes how Exxon conducted cutting-edge climate research decades ago and then, without revealing all that it had learned, worked at the forefront of climate denial, manufacturing doubt about the scientific consensus that its own scientists had confirmed.”

(I’d like to note: you could stop reading this post right now, and with the links I’ve just provided, you could already spend your entire day reading about a conspiracy.)

3. In summer 2016, Rolling Stone described ExxonMobil’s efforts to discredit these two reports in the face of numerous (still ongoing) efforts by environmental advocacy groups and state attorneys general to sue Exxon for fraud.

4. Part of this effort involved accusing the Rockefeller family of a “climate conspiracy,” since they had funded some of the investigations.

5. Tillerson refused to acknowledge the Exxon climate change cover-up during his Senate confirmation hearing.

6. He also refused to acknowledge Russia’s history of human rights abuses….

7. …and he denied that Exxon had lobbied against the sanctions imposed by the U.S. on Russia, which was a lie told under oath. As the New York Times reported way back in 2014:

Mr. Tillerson, Exxon’s chief executive, told reporters last week in Dallas that the company was making its skepticism about sanctions clear to the United States government. “Our views are being heard at the highest levels,” he said.

In fact, Exxon lobbied against sanctions as recently as December 2016.

8. Exxon had good reason to want the sanctions lifted. Again per the New York Times, in 2014, even as the U.S. was imposing sanctions on Russia for its aggression in Ukraine, Exxon signed an agreement with the Russian state-owned oil company Rosneft to expand its drilling ventures in the Arctic and Siberia. This was not unusual—many oil companies continued making agreements with Russia, just in case sanctions were lifted.

There are so many things bigger than a dumpster left to set on fire.

There are so many things bigger than a dumpster left to set on fire.

9. However, Tillerson had by this time developed a notably cozy relationship with Russia. The New York Times reports:

…as Mr. Putin consolidated his control over Russia’s oligarchs, Mr. Tillerson underwent a profound change of outlook. He came to realize that the key to success in Russia, a country deeply important to Exxon’s future, lay in establishing personal relationships with Mr. Putin and his friend and confidant, Igor Sechin, the powerful head of Rosneft, the state oil company.

10. Tillerson’s relationship with Igor Sechin is apparently quite personal: “Sechin told a Reuters reporter that the sanctions hurt him in a personal way; he would no longer be able to come to the United States to take motorcycle rides with Tillerson.” Why does this matter? Well, there’s the not insignificant point that Sechin is, to editorialize briefly, a Keyser Söze-esque mythical crime lord. Per the Guardian in 2012:

For much of his career Igor Sechin – a former Soviet spy and close ally of Vladimir Putin – has been a man in the shadows. During Putin’s first presidential stint, the joke doing the rounds in Moscow was that Sechin didn’t actually exist: instead, U.S. diplomats mischievously suggested, he was a sort of urban myth, a bogeyman invented by the Kremlin to instill fear.

11. After emerging from the shadows, Sechin (who, by the way, is also no fan of climate change science) became Putin’s de facto second in command, and in fact Tillerson’s rising star may have been the only thing to stop the setting of Sechin’s. To quote at length a Russian commentator writing for the New York Times:

After the collapse of the Soviet Union, Mr. Sechin aligned himself with Mr. Putin, another former K.G.B. officer, as he began consolidating power in post-Soviet politics. Everywhere Mr. Putin went, Mr. Sechin was by his side as a trusted aide and adviser.

… The arrest last month of Aleksei Ulyukayev, the minister of economic development, on charges of bribery was widely viewed as an act of revenge by Mr. Sechin. With the arrest, the first of an active government minister in post-Soviet Russia, he again confirmed his image as the most sinister man in the president’s inner circle.

Earlier this year, Mr. Sechin’s expansion was so aggressive that it seemed plausible that Mr. Putin himself would get tired of him, and would try to rid himself of such an odious comrade in arms.

Now Mr. Sechin has nothing to fear. A gift has arrived from across the ocean. This man [Tillerson], whose international experience up to this point has been limited to his friendship with Hugo Chávez, the deceased president of Venezuela, has an exclusive international trump card that even Foreign Minister Sergey V. Lavrov lacks.

Mr. Sechin’s friend will head GosDep [the US State Department], against which Mr. Putin’s entire domestic policy has been directed. It’s a stunning boon for the Kremlin and a crushing blow to everyone in Russia who has counted on the State Department to maintain anti-Putin positions, however restrained they might be.

Indeed, not only has Sechin avoided a possible fall, but his influence has reached new heights, or so the Economist reports:

“HELLO, you’ve called Rosneft,” goes a joke making the rounds in Moscow. “If you have an oil asset and you don’t plan to sell, press the hash key.” The Russian word for hash key, reshetka, also means “bars”, as in jail—where those who cross Rosneft’s head, Igor Sechin, tend to land.

12. That joke is a reference to the fact that on 7 December 2016, Rosneft sold off 19.5% of its shares, “one of [Russia’s] biggest privatizations since the 1990s.” Reuters reports that it “isn’t possible to determine from public records the full identities of those who bought it.”

Like many large deals, the Rosneft privatization uses a structure of shell companies owning shell companies, commonly referred to in Russia as a “matryoshka”, after the wooden nesting dolls that open to reveal a smaller doll inside.

Following the trail of ownership leads to a Glencore UK subsidiary and a company that shares addresses with the Qatari Investment Authority, but also to a firm registered in the Cayman Islands, which does not require companies to record publicly who owns them.

Moreover,

Two sources in the Russian government said the deal was also a surprise there: it had been agreed between Sechin and Putin’s Kremlin, above the cabinet. “Sechin did it all on his own – the government did not take part in this,” one of the sources said.

13. In light of this unusual sale, observers have pointed out that in the Steele Dossier, which has not been verified, and which began circulating in October 2016, it was alleged that, as Business Insider reports,

Igor Sechin, the CEO of Russia’s state oil company, offered former Trump ally Carter Page and his associates the brokerage of a 19% stake in the company in exchange for the lifting of US sanctions on Russia.

The dossier says the offer was made in July, when Page was in Moscow giving a speech at the Higher Economic School. The claim was sourced to “a trusted compatriot and close associate” of Sechin, according to the dossier’s author, former British spy Christopher Steele.

“Sechin’s associate said that the Rosneft president was so keen to lift personal and corporate western sanctions imposed on the company, that he offered Page and his associates the brokerage of up to a 19 per cent (privatised) stake in Rosneft,” the dossier said. “In return, Page had expressed interest and confirmed that were Trump elected US president, then sanctions on Russia would be lifted.”

There is some confusion about whether Page was even in Moscow on the alleged date, whether he was really ever working for the Trump campaign, and whether he wasn’t just bluffing. As Politico reported in September, when Page was first being investigated:

You are engaged in onanism,” said Leontiev, the spokesman for Rosneft and Sechin when I asked him if Page had met with Sechin. “It’s bullshit. Just bullshit. You need to understand who Sechin is to even ask this question. It’s hard to have a meeting with him at all. It’s absurd.”

However, it is worth noting two things.

First, in September, U.S. intelligence officials investigated Carter Page not only for meeting with Sechin but also, on the same trip, meeting with Igor Diveykin, whom U.S. intelligence officials believed was coordinating interference in the US elections. Yahoo News reported:

A former Russian security official, Diveykin now serves as deputy chief for internal policy and is believed by U.S. officials to have responsibility for intelligence collected by Russian agencies about the U.S. election, the Western intelligence source said.

Carter Page returned to Russia in December, and by January he was known to be under investigation by the FBI, the CIA, the NSA, ODNI, and FinCEN.

Second, over the past several weeks, there have been several arrests and one mysterious death in Russian intelligence circles, and Russian media (for what that’s worth) suggests that the arrests were linked to leaks—possibly leaks to Christopher Steele. Which could mean that the dead man, Oleg Erovinkin, is also linked to Christopher Steele. He could very well be the “trusted compatriot and close associate” of Sechin’s cited in the Steele Dossier. Quartz reports:

Which leads to the Dec. 26 death of a former KGB general named Oleg Erovinkin. An initial news account at the Russian website Life.ru said Erovinkin had been killed, shot twice in the head. That version quickly morphed into vaguer accounts of a death-under-investigation.

But the larger interesting fact related to Erovinkin’s death was that Steele’s memo cites a a source close to Igor Sechin, the Putin intimate and chairman of Rosneft. And Erovinkin—a long-time senior aide to Sechin—must be that source, a number of the news accounts speculate. Thus, according to these news accounts, there is a link between the Steele memo and Erovinkin’s death.

14. And, having not much further to go down that particular rabbit hole, I’ll direct your attention back to two entirely verifiable facts about Rex Tillerson’s new gig: the Trump administration drastically thinned the ranks of the State Department’s senior staff before Tillerson even had a chance to take over, and the entire Foreign Service is in an uproar over the Muslim ban.

So now you’re up to speed. Congratulations on having made it this deep. As we said in a simpler time, Drill, baby, drill.