MOSCOW (Reuters) - Igor Sechin, one of President Vladimir Putin’s closest confidants, was named CEO of Rosneft on Tuesday, putting the informal leader of a political clan drawn from the Soviet secret services in direct charge of Russia’s biggest oil company.
His move from the corridors of power to the executive suite at Rosneft - just across the Moscow River from the Kremlin - marks the culmination of Sechin’s evolving role as energy ‘tsar’ in the world’s largest oil-producing nation.
Rosneft’s shares gained by as much at 3.5 percent as industry analysts welcomed the appointment, praising the unparalleled lobbying power and proven ability to cut deals of a man who had until last year been the firm’s part-time chairman.
“He has been heavily involved in running the company for a long time,” one government source said. “He has a vision for the company ... He is a great deal maker. He can get things done.”
A deputy prime minister in the last government, Sechin’s appointment at Rosneft resolved a final doubt over the shape of Putin’s new administration, after the unveiling of a new cabinet and naming of several former ministers to senior posts on the Kremlin presidential staff.
It is also a milestone on a personal journey that has taken Sechin, 51, from Soviet military service in Africa in the dying days of the Cold War - by some accounts, involved with supplying weaponry to Marxist forces there - to championing an alliance for Rosneft with American oil giant Exxon Mobil.
He takes over at a company with enough reserves to last over a quarter of a century at current rates of production and $12 billion in annual profits. With a market capitalization of $66 billion, it is undervalued by international comparisons.
“He has tried to increase the market cap of the company, is a heavyweight on the Russian political scene,” said Karen Kostanian, energy analyst at Bank of America Merrill Lynch in Moscow, who called Sechin “one of the closest people to Putin”.
Sechin is the leading light of the ‘siloviki’, or men of power, who like the former KGB spy Putin have long personal ties to the security services and whose families are in some cases linked by marriage.
The pair have been close since meeting in the early 1990s when Putin was a rising star in St. Petersburg city politics.
When Putin was first elected president in 2000 he named the burly Sechin his deputy chief-of-staff, a powerful role behind the scenes that earned him the nickname “Darth Vader” in the press. Russian newspapers complained the “grey cardinal” moved so deep in Putin’s shadow that they had no photographs of him.
Sechin’s role with Rosneft has long been an active one. He staked a claim to his new job by striking three exploration deals - with Exxon, Statoil of Norway and Italy’s Eni - during the 11-week transition since Putin’s election.
Those partnerships seek to develop Rosneft’s vast offshore reserves and secure a foothold abroad that would help acquire know-how in extracting hard-to-recover ‘tight’ oil - trapped in non-porous rock - from its fields in Siberia.
They were only possible, industry sources say, thanks to Sechin’s ability to convince Putin to back a new tax regime designed to take into account the huge up-front investment costs of offshore exploration projects.
Sechin flew to New York last month to brief investors on the Exxon deal, which Russia estimates could generate $500 billion in investments to develop nearly 100 billion barrels of offshore resources in the Arctic and Black Sea - four times the existing reserves controlled by Exxon, the world’s biggest oil producer.
“This project’s ambitions ... exceed the programmes to put a man in space or to fly to the moon,” Sechin said, urging the United States and Russia to cast off “excessive politicization resulting from historical stereotypes”.
On Tuesday, Sechin told Dmitry Medvedev - now prime minister after four years as president while Putin waited to return to the Kremlin - that he would “sustain and expand” output at Rosneft. It reached 2.45 million barrels a day last year, reinforcing the company’s status as Russia’s largest taxpayer.
Sechin and Medvedev clashed during the latter’s time as head of state, while Putin was premier. Medvedev, Putin’s younger protégé, ousted Sechin a year ago as chairman of Rosneft in a bid to cut politicians’ influence over large state companies.
Sechin, who advocates a strong state role in the economy, looks poised to keep significant sway over the energy sector even outside government, after Putin nominated him to the board of the main state energy holding company.
With the stroke of a pen, Putin also decreed on Tuesday that state power-sector assets could not be sold off without his presidential approval, undermining his newly appointed premier’s goal of launching a major privatization drive.
Sechin’s official biography is extremely brief and little is known about the first 28 years of his life - a blank that has let others speculate about what he might have done in the 1980s, when Portugal’s former colonies in southern Africa were proxy battlefields in the Cold War between Moscow and the West.
Fluent in Portuguese, Sechin worked as a military translator in Angola and as a translator in Mozambique with a shadowy Soviet trade body named Tekhnoexport. It is reputed to have supplied arms to pro-Communist armies in Africa.
His roles in Putin’s Russia have also been the focus of unsubstantiated speculation. Viktor Bout, also a Soviet military linguist in Africa, who was jailed this year in the United States as a major international gun runner, denied suggestions that he had had dealings with the president, or with Sechin.
The latter was still barely known to the Russian public when in 2004 he was appointed chairman of state-owned Rosneft, then just one of several mid-sized Russian oil producers. But Rosneft would grow dramatically when its biggest competitor, Yukos, was bankrupted by massive tax bills and its principal owner, Mikhail Khodorkovsky, was jailed for fraud and tax evasion.
Khodorkovsky, who is still in prison, has accused Sechin of orchestrating his prosecution and the take-down of Yukos for the benefit of state officials who have grown wealthy from business. Rosneft snapped up Yukos’s key producing asset, Yugansk, at a bankruptcy auction and then floated on the stockmarket in 2006, raising $10 billion in Russia’s largest initial public offering.
Further major transactions followed, with the signing of a oil export and loan deal with China that helped open up a new eastern oil pipeline export route, reducing Russia’s dependency on the European market.
Sechin suffered a blow when his first attempt to strike a big offshore development deal, with BP, collapsed in May 2011 amid acrimony between the British firm and the wealthy local co-owners of its Russian venture, TNK-BP. But he was unrepentant, saying last year: “Rosneft fought like a lion for the interests of the company and its shareholders.”
He was also the subject of speculation about his health last year, though he has denied having any problems.
Putin clearly has great trust in his long-time ally. In March, the newly re-elected president spoke of what it was that he valued Sechin for: “For his professionalism and his grip, for getting the job done,” Putin said. “If he starts something, one can be sure that the job will be done.”
Additional reporting by John Bowker, Megan Davis, Vladimir Soldatkin and Alexei Anishchuk; Writing by Douglas Busvine; Editing by Steve Gutterman and Alastair Macdonald