Streetwise Professor

March 30, 2009

Igor Sechin, Revisionist Historian

Filed under: Commodities,Derivatives,Economics,Energy,Politics,Russia — The Professor @ 9:41 pm

The WSJ has a long article based on an exclusive interview with your fave and mine, Igor Sechin.  It is full of the usual his-lips-are-moving whoppers, but this one stunned even me, even as predisposed as I am to snort at pretty much anything old Eyegore has to say:

And he was quick to point out that Russia became a major oil exporter in the 1970s in response to demand in the West amid the Arab oil embargo. “Now they tell us, ‘You have Dutch disease, you’re a resource economy.’ But you yourselves asked us to be that way,” he said.

Sorry, but WTF is he talking about?  Yeah, the USSR was just eager to please the US and the West in the early-to-mid 1970s.  We said “jump”, and Brezhnev said “how high, boss?”  

Please.  The Soviets exported oil because (a) there was money in it, (b) they needed a lot of money, given that the rest of the economy was going to hell (especially the agricultural sector, which couldn’t feed the country), and (c) they had absolutely nothing else to sell that anybody wanted.  

What is it about Russians that they are responsible for absolutely nothing?  It’s always “The Devil (i.e., America) made me do it!”  They are wanna be Masters of the Universe, but everything is out of their control.  Sheesh.

Here’s another one from Putin’s Pinnochio:

Mr. Sechin is Moscow’s point man for warming relations with the Organization of Petroleum Exporting Countries. But he said Russia, the largest oil producer outside the cartel, isn’t ready to accept membership in the group, despite its pleas.

It would be irresponsible for Russia to join OPEC because we can’t directly regulate the activity of our companies,” he said, as nearly all are privately owned.  (Emphasis added.)

Spare me.  

First, Russia taxes oil exports.  It is perfectly feasible for Russia to regulate the activities of its companies indirectly through the oil export duty mechanism.  Russia can achieve any level of exports it wants by adjusting the duty.  And it has been adjusting it–downwards, thereby encouraging oil exports.  (Maybe Sechin was quite deliberate in including the word “directly” in his answer, knowing quite well that this is an irrelevance, given the ability of the government to control exports via the tax mechanism, without directing companies to do anything.)  

Second, “nearly all are privately owned”–except the one that is by far the biggest, Sechin’s own Rosneft.  And, does he really expect us to believe, with Khodorkovsky in the dock, Mechel’s CEO Igor Zyuzin contemplating what Putin meant about “sending a doctor” (and given Russian healthcare, that is a frightening prospect), BP-TNK’s Dudley fleeing the country, etc., that if Putin or Medvedev told the owners/managers of these “privately owned” companies to cut exports, that they wouldn’t salute and ask “how much?”  

Sechin repeated his call to segment and “gasify” the oil market:

Mr. Sechin called for a gradual but major overhaul of the international oil trade, adding tight regulation and longer-term supply contracts, eliminating “economically unjustified intermediaries” and reducing speculation. Russia is the world’s No. 2 crude exporter.

Russia doesn’t like open markets and price discovery.  It likes market segmentation and backroom deals.  

In the add insult to injury category, Sechin uttered these Orwellianisms:

Mr. Sechin hailed  BP  PLC’s TNK-BP Ltd. joint venture in Russia as a sign of Russia’s openness to foreign investment in the sector. But he singled out secretive Siberian giant OAO Surgutneftegaz as “Russia’s best private oil company.”

Investors have criticized Surgut for refusing to release international-standard financial accounts or details of its ownership structure.

Surely, from Sechin’s perspective, black hole Surgutneftegaz is indeed the ideal energy company.  And yes, the whole BP-TNK fiasco is just a shining illustration of how an Investor’s Paradise has risen from the ashes of the former Worker’s Paradise.  Orwellian, like I say.

I actually appreciate the fact that Sechin has become much more open.  By speaking publicly, he reveals his utter mendacity, and in so doing, provides a revealing glimpse at the equally mendacious regime in which he serves.

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  1. […] And what’s up with the stinge on the onions anyway? These had gone through Igor Sechin, Revisionist Historian – 03/31/2009 The WSJ has a long article based on an exclusive interview […]

    Pingback by Ладушки.Net » Blog Archive » Posts about Putin as of 31/03/2009 — March 31, 2009 @ 2:48 am

  2. What do you expect from these folks, they come from the ranks of the FSB. The upper echelon in the Kremlin have no experience or education in managing a modern business let alone economy. Igor Sechin is a disgusting reptile.

    From a translated Der Spiegel article today on Robert Amsterdamn’s site:

    Khodorkovsky was selected to say a few words. Two high-level bureaucrats had encouraged him to be candid. Alexander Voloshin was then in charge of Kremlin administration, and Dmitry Medvedev, now president, was his proxy. The two of them pursued their own interests and used Khodorkovsky in one of the many opaque power plays within the Kremlin to weaken their opponent. They were concerned with Igor Setchin, one of Putin’s most trusted aides.

    Khodorkovsky realized their hopes. He talked about dirty oil deals, denounced corrupt bureaucrats and although he did not name names, everyone knew who he was talking about. The TV recordings show how pale Khodorkovsky looked, his voice shook, sometimes he stumbled over his words as he said Russia was a corrupt country and intimated that the camarilla surrounding the president was also involved. It was a strange performance, as though Khodorkovsky guessed that things would not go well for him.

    Khodorkovsky, who had build up the most modern oil company in Russia, could hardly harm Setchin. Today he is the proxy for the Prime Minister, named Vladimir Putin, and unofficially the number three man in the country. Khodorkovsky fell hard and Setchin was one of the beneficiaries; today he is also chairman of the board at Rosneft, one of the state’s oil giants, which took over a large part of the dismantled Khodorkovsky company Yukos.

    Refusing to take responsibility for anything permeates Russian society at every level. It’s so childlike and maladaptive. I guess after 7 decades of mind numbing Communism, all of those millions lost from the gene pool by Stalin’s reign of terror and the fodder of young males needed to win WWII, the horrific abortion rates have taken a severe toll. The meek and the predatory seem to be the only groups left standing.

    Comment by penny — March 31, 2009 @ 11:18 am

  3. Penny. I think “reptile” is too kind. I was thinking something invertebrate, e.g., slug, cockroach, scorpion. Probably the latter is most apt.

    The ProfessorComment by The Professor — March 31, 2009 @ 12:59 pm

  4. […] Streetwise Professor and Robert Amsterdam's Blog comment on a WSJ piece based on an interview with Russia's deputy prime minister Igor Sechin. Cancel this reply […]

    Pingback by Global Voices Online » Russia: Igor Sechin in WSJ — March 31, 2009 @ 6:25 pm

  5. I am worried by your moral relativism and apologetic neo-Soviet tendencies. Daring to describe Sechin as a reptile is despicable; even slug or scorpion doesn’t go far enough. Only virus would do semantic justice, if not string.

    Comment by Sublime Oblivion — March 31, 2009 @ 8:35 pm

  6. PS.

    After a months-long crisis of conviction, I unequivocally reject my support, rationalization and in a sense enablement of the reptilian thugs, reptiles and kleptocrats who stalk the parapets of the Kremlin.

    Comment by Sublime Oblivion — April 1, 2009 @ 2:30 pm

  7. Happy April Fools Day to you too, DR.

    The ProfessorComment by The Professor — April 1, 2009 @ 4:26 pm

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