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With a BP deal, Russia’s powerful oil czar may also finally get his revenge
Over the last 48 hours, Igor Sechin, the most powerful oilman in Russia, has initialed a $56 billion whirlwind of deals that, if finalized, would create the world’s largest publicly traded oil company—bigger than ExxonMobil, bigger than PetroChina. But while that is heady stuff, there is something else on Sechin’s mind than mere empire building. It is revenge against four Russian oligarchs who humiliated him and left him in the political wilderness last year. For that reason, what we may learn in an official announcement as early as Oct. 18 may be not just of a blockbuster oil deal, but also of the Waterloo of some of Russia’s most successful robber barons of the age.
On Oct. 16 in Moscow, Sechin signed a memorandum of understanding (MOU) in which state-controlled Rosneft would buy 50% of TNK-BP, the nation’s third-largest oil company, from a Russian group called AAR for $28 billion. Just hours later, he flew to London for more negotiations, this time with BP, which owns the other half of TNK-BP, to buy its stake for the same sum in cash and shares. On Oct. 19, BP’s board is to vote (paywall) on the offer.
If both deals proceed, Rosneft will produce some 4.4 million barrels of oil a day, more than any other listed company in the world.
But let’s look at the agreements. The deal between Rosneft and BP, negotiated over the last three or so months, appears to be as sure as any mutually desired accord can be before it is finalized. Expect it go through. Not so much the AAR half. This is because of the identities of AAR’s owners—the four oligarchs who undermined Sechin’s authority in January 2011 by torpedoing a prior blockbuster deal with BP on the Arctic Sea.
At the time, Sechin was known as Russia’s “third man,” the most powerful political figure apart from the president and prime minister. Over the years, he was said to be the key mover behind the breakup of Yukos, Russia’s biggest oil company, whose owner was thrown in prison, and the acquisition of its choicest parts for Rosneft. A journalist dubbed him “Darth Vader” for the dark powers he wielded as both deputy prime minister and chairman of Rosneft. But after AAR successfully sued to stop the January 2011 BP-Rosneft agreement, Sechin lost prestige, and was forced out as deputy prime minister....MORE