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Irina Slav

Irina Slav

Irina is a writer for the U.S.-based Divergente LLC consulting firm with over a decade of experience writing on the oil and gas industry.

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The Most Feared Businessman In Russia

The dominant narrative in Western media often paints Vladimir Putin as an all-powerful puppet master, whose long hand—at least according to a segment of the media flood—reaches all the way to Washington. But is the Russian President really as all-powerful as he seems? Perhaps not, writes Ken Rapoza in a story for Forbes.

Many politicians and big business execs seem willing to face Putin on a bad day. Less so are those willing to face Rosneft’s chief, Igor Sechin.

Sechin—or Darth Vader, as he is often called—has earned his reputation and nickname. Most recently, he proved a worthy recipient of his nickname by settling a score with financial conglomerate Sistema and its founder Vladimir Yevtushenkov over the sale of Bashneft—a regional oil company that Sistema privatized but the government seized in 2014 on the grounds that the privatization had been illegal. Rosneft bought Bashneft in 2016, and sued Sistema last year for removing assets from the company.

Eventually, the dispute ended amicably, with Sistema agreeing to pay $1.7 billion to Bashneft—that is, to Rosneft. According to Rapoza, this means simply that Sechin had managed to acquire Bashneft at a serious discount. The selling price back in 2016 was $5 billion.

Indeed, a $1.7 billion discount is substantial, and is indicative of Vader’s business growth strategy: discount acquisitions. That’s what a Sberbank equity report concluded at the end of last year. So, it wasn’t about a score needing to be settled, but about business, pure and simple. But according to the Sberbank report, Rapoza notes, Sechin is not the best captain of the Rosneft ship. Related: Rig Count Shoots Up As Oil Nears $70

If that’s true, it could be because the Rosneft CEO is too busy fighting his opponents. His most recent offensive was against former Economy Minister Alexei Ulyukayev, who last month received an eight-year prison sentence for corruption. The corruption charges were related to the Bashneft deal, again.

According to the court, in his position as minister, Ulyukayev has had the power to exert influence over participants in the deal, and used this power to extort none other than Igor Vader for $2 million. The bribe was payment for the minister’s consent to give the deal the go-ahead. If Sechin failed to cough it up, the prosecution argued, Ulyukayev had threatened to interfere with other Rosneft deals. Sechin did cough up the dough, but it was in a sting operation that caught Ulyukayev red-handed.

The former minister himself naturally denies any wrongdoing. Quotes from Ulyukayev’s testimony read like Russian folk tales, but the ending is unhappy. For example, he claims that Sechin was in the habit of giving him expensive presents, including what he said was wine, but was actually cash. Here’s the quote and it’s priceless: “He promised in Goa that he would give me wine that I’d never tried before. I never doubted that it was a high-quality alcoholic drink in the bag. The size and weight seemed to correspond.”

Where is Putin in all this? The Russian president seems to have given a free hand to Rosneft’s boss who, sources quoted by Rapoza say, has very deep ties in Russia’s security authorities and the government. Western media usually refers to Sechin as “a close ally” of Putin. Given his ultra-nationalism and an evident tendency to not let anyone or anything stand in his way, one could only hope he has no direct political ambitions: Putin is up for re-election this year, but this will be his last term, so he is certainly already looking for a successor.

By Irina Slav for Oilprice.com

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