Streetwise Professor

May 23, 2011

Igor Pyle

Filed under: Energy,Politics,Russia — The Professor @ 4:45 pm

It strains credulity to believe that Igor Sechin (who would be perfectly cast playing his namesake in a remake of Frankenstein!) did not know that the TNK-BP shareholders agreement required BP to undertake all Russian operations via TNK-BP:

Deputy Prime Minister Igor Sechin, who this week saw the crowning achievement of his career as Russia’s energy tsar thwarted by rival businessmen, shows no sign of conceding defeat.

. . . .

“I wouldn’t say that anyone contributed to the deal’s collapse. It’s just when there is no full information, when Rosneft had no opportunity to become familiar with the (TNK-BP) corporate agreement, it’s hard to make a decision,” he added.

I have been trying to track down what was public about the shareholder agreement going back to when it was revised in 2008-2009, but it’s hard to troll through all the material that’s out there.  I do have a distinct recollection that during the time of the pre-September, 2008 face-off between Dudley/BP and the AAR people (which, remember, featured raids by masked security personnel), there was mention that the shareholder agreement restricted BP’s operations in Russia.  At the very least, somebody–many somebodies, actually–should have asked.

But even if the details were not public, are we really to believe that the shareholder agreement details were concealed from a Russian government headed by an ex-KGB/FSB agent, and a Russian oil company headed by someone with a similar pedigree?  Really?  Especially since per Wikileaks, the US government was apprised of the behind-the-scenes dealing involved in the renegotiation of the agreement?  If the State Department had its sources, is it at all plausible that Putin, Sechin, et al, didn’t have theirs?  Please.

I don’t know exactly what went on here.  I am virtually metaphysically certain, however, that the public stories by Putin and Sechin are risible.  There was–is–some game within the game within the game.  I would wager that Sechin–and perhaps Putin–told BP that the shareholder agreement wouldn’t be a problem.  Then it was.  Why it was remains in the realm of conjecture.  Was it Sechin playing Lucy-and-the-football in an attempt to extract more out of BP?  Did the AAR oligarchs play a card that Sechin (and perhaps Putin) didn’t expect?  (Perhaps a card involving the upcoming election campaign?)  Again, I don’t know.

But I do know that Sechin does a very poor Gomer Pyle imitation:

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  1. You probably remember Putin’s statements around the time Dudley was run out of…Moscow. He often talked about warning BP and TNK not to agree a 50/50 split with neither company having a controlling interest. He talked about how he was at the signing and they would not listen to him.

    The big regulatory roadblock for the agreement was approval by (at that time) the Anti Monopoly Ministry. I believe at that time the Minister was named by and reported to Putin. There is no doubt they approved each and every comma, period, and word. A right of first refusal clause is included in most shareholder agreements in Russia. Putin was almost certainly aware of the clause in the BP AAR agreement.

    I am of the school that Sechin (not believing much in the reality of inconvenient commercial agreements) BS’ed BP that it would not be a problem but Sechin was unable to obtain the support of Putin to intercede with AAR. Sechin was the key person to obtain Putin’s approval to start moving against Yukos but was unable to do so in this far lesser case.

    There are many possibilities that could have impacted the situation one of which is that Sechin will have a reduced role after Putin regains the presidency. He is downgrading the role of Medvedev and so tit for tat will downgrade the role of a major Silovik. Putin will of course fill positions with the least threatening most loyal most easily controlled people that he knows. If Putin even viewed Medvedev as possibly disloyal God knows what kind of people will meet his standard. The next few years will likely be the Golden Age for judo black belts from St Petersburg in Russia eclipsing even their recent seemingly miraculous good fortune.

    Comment by pahoben — May 24, 2011 @ 9:52 am

  2. @Pahoben–thanks for the very interesting detail re the Anti Monopoly Ministry and the approval of the shareholder agreement. Your conjectures re what happened are plausible. I think it’s almost certain that Sechin gave assurances to BP, and then Putin shafted him. That’s where things dissolve into riddles, enigmas, etc. But I agree with you that it has something to do with the Restoration.

    I’m looking for a dojo to join. Any ideas? 🙂

    The ProfessorComment by The Professor — May 24, 2011 @ 10:27 am

  3. I didn’t give you credit for the original judo post-it was very very good and I still laugh when it comes to mind.

    Comment by pahoben — May 24, 2011 @ 10:34 am

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