Igor Sechin, Moscow’s oil man turned global dealmaker
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
In early 2015, Igor Sechin sat opposite Russian president Vladimir Putin and received a public dressing-down. “Where is the real Sechin?” Mr Putin asked his old ally in answer to the Rosneft chief’s request for government support for the state oil company, reminding him to consider the impact of his actions on the country’s economy.
On Wednesday evening, Mr Sechin again faced Mr Putin, this time triumphant, announcing to the president a deal to sell a 19.5 per cent government stake in Rosneft to Glencore and the Qatar Investment Authority for just over €10bn. The deal would at a stroke cut the Russian government’s budget deficit by a fifth and represents the largest foreign direct investment into the country since western sanctions were imposed in 2014.
It also marks a return to dealmaking form for Mr Sechin, 56, one of the most powerful figures in the Russian elite, a man at the centre of almost every financial and political event in the country.
In the past two months alone, Rosneft has announced a string of acquisitions worth nearly $11bn. Mr Sechin also played a key part in the political event that has shaken the country: the arrest last month of economy minister Alexei Ulyukaev for allegedly extorting a $2m bribe from Rosneft.
People close to the Rosneft boss say his ever-growing clout is underpinned by his ability to execute deals that serve government interests. “Times are hard. They want solutions. He comes to them with solutions,” says one.
The sale of Rosneft’s shares to Glencore and Qatar represented the solution to a problem that had seemed intractable: how to sell shares in the Russian company in spite of western sanctions. While not prohibiting companies from buying Rosneft shares, they made many cautious; as well as low oil prices, and the dubious desirability of a minority stake in a Kremlin-controlled entity. Most investors assumed Rosneft would buy its own shares back from the government in order to meet a year-end deadline to complete the transaction.
When Mr Putin congratulated him on a “very good result”, Mr Sechin replied that it was “only possible thanks to your personal contribution and support”. The Rosneft boss has had plenty of time to practise his loyalty to the Russian leader. Born in Leningrad in 1960 into a family of factory workers, he is one of Mr Putin’s oldest allies.
After stints as a translator in Angola and Mozambique, where he is widely believed to have worked for Soviet military intelligence, he became Mr Putin’s chief of staff when the latter was deputy mayor of St Petersburg in the 1990s.
When Mr Putin became president, Mr Sechin followed as deputy head of his presidential administration; when Mr Putin moved to become prime minister in 2008, Mr Sechin again followed him.
Mr Sechin was instrumental in transforming Rosneft from a bit player in the Russian oil industry, dwarfed by oligarch-owned competitors, into the country’s largest company and the world’s largest listed oil company with an output of 5.5m barrels of oil equivalent per day — half that of Saudi Arabia.
Colleagues say Mr Sechin is a workaholic and an exacting boss, who has been known to seize the wheel from his driver and speed through Moscow, leaving his entourage for dust. He says he spent 650 hours in the air last year.
He guards his personal life fiercely. He sued two Russian newspapers this summer after they claimed he had a mansion outside Moscow and bought his new wife a luxury yacht. A third case, against business outlet RBC, is due to be heard on Monday.
His relentless expansion of the state’s role in the Russian economy has made him a bogeyman for Russia’s economic liberals. He was considered closely associated with the state conquest of Yukos, the private company that was bankrupted, then largely folded into Rosneft.
In 2013, Mr Sechin led Rosneft’s $55bn acquisition of TNK-BP. It was badly timed: oil prices and the rouble plunged in late 2014, and Rosneft’s hefty debts became problematic. At one point he suggested the government should spend $40bn buying Rosneft’s debt. Then, on the eve of a $7bn bond repayment deadline, the company borrowed heavily in the local market in a deal that spooked traders, contributing to a collapse in the value of the rouble.
A few weeks later he was in front of Mr Putin, eating humble pie. “He lost a few feathers,” says one oil executive in Moscow, “but he never went away.” The clearest sign of Mr Sechin’s rebound came with the battle for Bashneft, a midsized oil producer on sale in the government privatisation programme.
Despite being a state company, Rosneft submitted an application — to the displeasure of much of the government. Months of infighting ensued and rumours circulated that Mr Sechin might lose his job. Yet in October he prevailed, buying Bashneft for $5.2bn. A month later, Mr Ulyukaev, who had spoken against the deal, was under arrest. “Everyone in the government is afraid of Sechin, especially after the Ulyukayev case,” says one Russian banker.
The deal with Glencore and Qatar demonstrates that Mr Sechin is an indispensable asset to the Kremlin, argues James Henderson, a Russia expert at the Oxford Institute for Energy Studies. “Rosneft is the hub for international co-operation in the energy sphere.”
What will Mr Sechin’s next deal be? Few expect him to rest on his laurels. In a rare personal article on his love of jazz, he wrote: “The most important thing in jazz, just as in life, is improvisation.”
The writer is FT correspondent in Moscow
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