To secure mineral rights, governments are instituted…

Over objections of the US government, ExxonMobil’s CEO Rex Tillerson has traveled to Moscow to speak at the World Oil Congress. According to Russian-language media, his speech included, at least in reverse translation, this bit: “Governments are key guarantors of law in their countries. They ensure that all [economic] agents have equal rights.” Especially the Russian government, sure. Tillerson has mentioned some “bad decisions” by some governments that need to be discussed, apparently referring to the US sanctions against Russia and specifically against the CEO of Rosneft, Exxon’s Russian partner. Robert Dudley of BP and Christophe Margerie of Total are also attending the Moscow forum.


  1. There are two problems here:

    1) Major private oil companies are so desperate to maintain their reserves replacement rate and production rate that they will climb into bed with just about anybody. Blame the shareholders for this.

    2) Many of these people are making the same mistake with Russia that they do elsewhere, but in Russia the problem is especially acute: they think that sucking up to Russians will bring them long-term rewards. Quite what part of Russian history or culture they have studied to reach that conclusion I don’t know, but from my experience Russians respect strength, courage, and determination more than soft-peddling toadyism. The Russian government might be making accommodating noises now, when it suits them…but you can expect the goalposts to be shifted rapidly when it doesn’t. What amazes me is not only that Exxon is participating in this (they are normally more sensible than the others, and drive a harder line), but that this strategy has been tried time and again before and always ends in tears. That Bob Dudley is still there singing the praises of Russia’s system of governance brings to mind Einstein’s definition of insanity.

    This will not end well.

    • I’m aware of (1) and the problems with it – not all reserves are created equal. On (2), I guess Exxon believes it can handle the Russian bear better than its predecessors. Arrogance meets naivete as it were. BP is stuck with 20% in Rosneft after Dudley’s cash-and-shares sale of TNK. Not much room for a confrontation left.

      • To be fair, Exxon probably can: they have played hardball with Rosneft and the Russian government before and come away with a satisfactory result. But the rest of them?

        Well, I recently spoke to one Russian construction engineer who told me about a job being executed by one of the western majors in Russia in which the Russian contractors played with their client “like a cat plays with a mouse”. Projecting my own experience onto this remark, I believe it 100%.

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