Trump to Pick Exxon CEO for Secretary of State Despite Close Ties to Putin
ExxonMobil CEO Rex Tillerson—who has close personal and company ties to Russia and President Vladimir Putin—is President-elect Donald Trump’s top pick to become the next secretary of state, with the decision likely coming next week according to NBC News.
The news comes amid reports that Congressional members and senior U.S. Central Intelligence Agency (CIA) officials say they have intelligence showing Russia attempted to tip the balance of the November U.S. presidential election in favor of Trump by hacking into email systems and giving those emails to Wikileaks. And President Barack Obama has called for a complete investigation on the matter before he leaves the White House on Jan. 20.
Though the evidence presented to the U.S. public so far lacks smoking gun documentation, many are alarmed that a geopolitical adversary may have interfered with the U.S. electoral process. Trump, though—who has signaled a potential sea change in the U.S.-Russia geopolitical relationship—is not among them, as indicated in his choice of Tillerson for top U.S. diplomat.
“If the goal is to drain the swamp in DC, Tillerson might not be your man; Exxon’s business plan continues to require raising the level of the ocean to the point where Foggy Bottom will be well underwater,” said 350.org founder Bill McKibben in a press release. “But this is certainly a good way to make clear exactly who’ll be running the government in a Trump administration—just cut out the middleman and hand it directly to the fossil fuel industry.”
Exxon Says It’s “Not a U.S. Company”
“Exxon boosted its Russian holdings to 63.7 million acres in 2014 from 11.4 million at the end of 2013, according to data from U.S. regulatory filings,” reported Bloomberg in March 2014. “That dwarfs the 14.6 million acres of rights Exxon holds in the U.S., which until last year was its largest exploration prospect.”
Exxon, though headquartered in Irving, Texas near Dallas, is a sprawling “private empire” with assets spread across the globe. When asked about building more U.S. refineries to protect the U.S. economy and consumers from fuel shortages, former CEO and chairman Lee Raymond put Exxon’s view of itself and its loyalty to the U.S. bluntly.
“I’m not a U.S. company, and I don’t make decisions based on what’s good for the U.S,” Raymond is quoted as saying in the 2012 book Private Empire: ExxonMobil and American Power by Steve Coll.
In June, Tillerson attended the St. Petersburg International Economic Forum after taking a two-year hiatus from attending the event, which is the top business meeting held annually in Russia. Igor Sechin, CEO of Russian state oil company Rosneft and currently the subject of U.S. sanctions, served as the keynote speaker.
Offshore Drilling, Fracking, LNG
Exxon and Rosneft have maintained close business relations, so much so that Putin gave the Order of Friendship Award to Tillerson in 2013. In terms of business ties, what has that “friendship” entailed?
The two oil companies had intended to tap into Russia’s bounty of over 191 billion acres of offshore Arctic oil as part of their joint venture. (However, that was before the U.S. sanctioned Russia for its incursion in Crimea, which has temporarily halted the drilling plans.) The two companies also co-run the Arctic Research and Design Center for Continental Shelf Development in Russia, in which Exxon maintains a 33.33 percent stake.
Since 1996, Exxon has also taken part in the Sakhalin Consortium, which centers around pumping oil offshore from Russia’s Sakhalin Island. Exxon and Rosneft also co-own acreage in Texas’ Permian Basin shale patch, and until recently dropping the joint venture, they co-owned 20 offshore drilling plots in the Gulf of Mexico.
Beyond the Gulf, Exxon maintains a joint venture with Rosneft to do offshore drilling in Alaska’s Point Thompson in the state’s North Slope territory.
In Russia, Exxon also co-owns a stake in the proposed Sakhalin liquefied natural gas (LNG) facility in Sakhalin, which would see that gas exported to the global market. However, the plant opening was delayed when sanctions hit, pushing it back at least two years according to an April 2015 announcement.
Exxon also has a joint venture with Rosneft in the Bazhenov Shale basin in Siberia, into which Exxon poured $300 million. Exxon owns a 49 percent stake and Rosneft 51 percent in that venture, which is to explore hydraulic fracturing or fracking possibilities in the field. If exploration bears fruit, Rosneft would hold a 66.67 percent interest in drilling the field while ExxonMobil would maintain a 33.33 percent stake.
“This agreement combines the strengths of our two companies,” Tillerson said when the two companies announced the deal in June 2012. “ExxonMobil has technology leadership in tight oil and unconventional reserves development and Rosneft brings direct knowledge and experience of Western Siberia’s geology and conventional production.”
If drilling proves technologically feasible, Bazhenov could become the most prolific shale field in the world.
Lobbying Against Russian Sanctions
As soon as sanctions are lifted in Russia, which Trump has said he would do, Exxon has said it will return to the Russian Arctic.
BuzzFeed has reported that a bill is now making its way through Congress which would make it much more difficult for the next president to reverse those sanctions, which were put in place through a series of executive orders. Exxon is very interested in the fate of that bill.
As Buzzfeed reported:
“We have not lobbied on the bill,” Alan Jeffers, spokesperson for ExxonMobil, told BuzzFeed News. “Our activities on the bill constitute monitoring of congressional activities.”
That was this summer before Congress was again in session. Yet the bill’s language has already been changed in a way that would make Exxon’s dealings in Russia much easier, as it essentially exempts the exective order sanctioning Rosneft and other Russian energy companies.
With Tillerson heading the State Department, this kind of international energy policy may become much more common.