May 23, 2011 / 7:50 AM / 8 years ago

RPT-PROFILE-Russia's oil tsar unbowed after BP breakdown

* Sechin says no mistakes made in Rosneft-BP deal

* Still in control at Rosneft

(Repeats to additional subscribers)

By Vladimir Soldatkin

PURPE, Russia, May 20 (Reuters) - 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.

Russia’s top energy official was hours away from a deal with British major BP (BP.L) that would have secured state-controlled Rosneft’s (ROSN.MM) lead in tapping Russia’s Arctic oil riches and bound it to the British major via a $16 billion share swap.

The alliance would have brought the government closer to realising its grand design of turning Rosneft into the world’s top publicly listed oil firm by output and creating a platform to take Kremlin Oil global.

But it was thwarted on Monday by the four tycoons who are BP’s partners in Rosneft rival TNK-BP TNBP.MM who insisted BP was bound to do deals in Russia only through the joint venture.

When the quartet, who had tried to gatecrash the deal, refused a $32 billion offer to sell out, Sechin let the BP deal expire rather than compromise, prompting President Dmitry Medvedev to take a jibe at him on live television. [ID:nLDE74H0R5]


Sechin, on a trip to Siberia to cut the ribbon on a pipeline link that would shorten the route of Russian exports eastward to China and the Asia-Pacific, was unbowed.

After Medvedev’s criticism was relayed to him, he approached reporters to say: “Rosneft fought like a lion for interests of the company and its shareholders.

“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.

Sechin, 50, who for years shied away from the public eye, has been a confidant of Prime Minister Vladimir Putin since they worked in St. Petersburg city hall in the early 1990s. He went on to become Putin’s deputy chief of staff in the Kremlin and was long regarded as the second most powerful man in Russia.

Russia holds a presidential election in March 2012. Medvedev and Putin, who steered him into the Kremlin in 2008, have yet to agree which of the pair will run.

The breakdown of the BP deal followed setbacks for Sechin in both business and politics. An agreement he helped broker to sell Russian oil to China is under threat from Rosneft’s Chinese customers who are challenging the price laid out in the deal.

Medvedev’s rebuke also followed a Kremlin edict that government officials step down from the boards of companies they regulate, depriving Sechin of the Rosneft chairmanship.

Some analysts have speculated Medvedev’s order was designed to strengthen his hand before the election at the expense of a Putin ally. But Sechin rejected suggestions that Medvedev’s order left him weakened.

“The government, including myself, still controls Rosneft,” he said.


In 1998, Rosneft produced just 250,000 barrels per day (bpd) of oil and the company faced the prospect of being privatised at the hands of Russian businessman Boris Berezovsky, who is now living in exile in London after falling from government favour.

Under Sechin’s chairmanship, Rosneft was transformed into Russia’s top crude producer with daily output of 2.4 million bpd — on a par with OPEC member Kuwait — since the company bought the assets of defunct company Yukos.

Jailed oil tycoon Mikhail Khodorkovsky named Sechin as the man who masterminded the Kremlin’s destruction of his Yukos business empire, which fell foul of Putin during his first term as president.

Sechin was in Siberia to bless the 430-km (270-mile) Purpe-Samotlor pipeline that will speed oil deliveries to China — a deal he masterminded — from Rosneft’s huge Vankor oilfield in the Arctic starting from December.

The link will help Russia to sustain its oil production at 505 million tonnes a year (10.14 million barrels a day), the world’s largest, through to 2020, officials say. “The pipeline is very important to keep oil production high,” said Sechin. (Editing by Melissa Akin and Douglas Busvine)

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