Page 6 - FSUOGM Week 21

FSUOGM COMMENTARY FSUOGM
Sechin to lead Rosneft for five more years
When Sechin arrived at Rosneft in 2004, the company was a relatively small collection of the state oil and gas assets left over from major privatisation sales in the 1990s
RUSSIA
WHAT:
Rosneft’s board of directors has reappointed Igor Sechin as CEO for another five-year term.
WHY:
Under Sechin, Rosneft has been transformed from a small collection of leftover state assets into Russia’s top oil producer.
WHAT NEXT:
He faces the challenge of steering the company through what could
be several years of unprecedented hardship for the oil industry.
ROSNEFT’S long-serving CEO Igor Sechin has secured another five-year term in the role, the Russian oil giant reported on May 24.
Sechin, a close confidant of Russian President Vladimir Putin, has led the national oil company (NOC) since 2012. Before that, he had served as the chairman of Rosneft’s board of directors since 2004. He also filled several roles in the Russian government during that time, includ- ing being deputy prime minister between 2008 and 2012.
When Sechin arrived at Rosneft in June 2004, the company was relatively small, com- prising most of the state’s remaining oil and gas assets after a series of major privatisation sales in the 1990s. In 2003 it produced a mere 19.6mn tonnes (394,000 barrels per day) of oil – equiva- lent to only 6.7% of national production.
Under Sechin, Rosneft transformed itself into the country’s top producer that now accounts for more than 40% of Russian output, or 4.67mn bpd. But its road to achieving this status has been marred by controversy.
Rise to dominance
The first major steps in Rosneft’s expansion were the acquisition of the former assets of the now-defunct Yukos oil company, once the coun- try’s top producer. Yukos was issued with tax claims worth $27bn in 2003, and over the next three years the company was dismantled and eventually declared bankrupt. Many of its prize assets were won by Rosneft at state auctions.
Yukos’ exiled owner Mikhail Khodorkovsky has long accused Sechin of orchestrating the oil giant’s destruction.
After Sechin assumed the role of CEO in 2012, Rosneft went on a buying spree, making $22bn in acquisitions over the course of five years. Rosneft drew criticism for this buying campaign, with analysts at Sberbank stating in a November 2017 report that it had “no clear focus”
In 2013 it took over Anglo-Russian venture TNK-BP – the biggest corporate transaction in Russia’s history.
The Russian government is widely seen as
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w w w . N E W S B A S E . c o m Week 20 20•May•2020