MOSCOW (Reuters) – Igor Sechin, one of Russian President Vladimir Putin’s closest confidants, was named CEO of Rosneft on Tuesday, putting the previous government’s energy ‘tsar’ in direct charge of the country’s biggest oil company.
The decision to hire Sechin resolves 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 top posts on the Kremlin presidential staff this week.
Sechin’s move from the corridors of power to the executive suite at Rosneft – right across the Moscow River from the Kremlin – marks the culmination of his evolving role over the past decade in masterminding strategic energy policy in the world’s largest oil-producing nation.
“He has been heavily involved in running the company for a long time,” one government source said of the decision to appoint the former deputy prime minister, which was taken with a delay after Putin’s re-election as president in March.
“He has a vision for the company,” the source added. “He is a great deal maker. He can get things done.”
Rosneft’s shares gained by as much at 3.5 percent as industry analysts welcomed the appointment, praising Sechin’s unparalleled lobbying power and proven ability to cut deals.
“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”.
STAKING A CLAIM
Sechin staked a claim to the job by striking a string of exploration deals – with Exxon Mobil (XOM.N) of the United States, Norway’s Statoil (STL.OL) and Eni (ENI.MI) of Italy – during Russia’s two-and-a-half month political transition.
The partnerships seek to develop Rosneft’s vast offshore reserves and secure a foothold outside Russia 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 – or four times Exxon’s existing reserves.
“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 politicisation resulting from historical stereotypes”.
Sechin told Prime Minister Dmitry Medvedev on Tuesday that he would “sustain and expand” output at Rosneft that reached 2.45 million barrels a day last year, reinforcing the company’s status as Russia’s largest taxpayer.
The pair clashed during the four years just ended when Medvedev was president and Putin prime minister. Medvedev, Putin’s younger protege, ousted Sechin a year ago as chairman of Rosneft in a bid to reduce political 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 a state energy holding company.
With the stroke of a pen on Tuesday, Putin also decreed that the state’s power-sector assets could not be sold off without his presidential approval, undermining the new premier Medvedev’s declared goal of launching an ambitious privatisation drive.
(Additional reporting by John Bowker, Megan Davis, Vladimir Soldatkin and Alexei Anishchuk; Writing by Douglas Busvine; Editing by Steve Gutterman and Alastair Macdonald)