Читать книгу The Squeeze: Oil, Money and Greed in the 21st Century - Tom Bower - Страница 6

Lee Raymond did not conceal his impatience. The Russian president was 30 minutes late. Speaking in muted voices, the three other men and one woman waiting with Raymond in the Waldorf Astoria suite speculated whether Vladimir Putin had abandoned the meeting. ‘I’m sure he’ll come,’ suggested one. Raymond’s irritation was not assuaged.

Dealing with dictators was usual for Exxon’s 65-year-old chairman and chief executive. In his experience, oil was mostly controlled by feudalists, kleptocrats, zealots and fanatics. ‘Go to the top, do the deal and the rest follows,’ was Raymond’s way. Over recent years the chemical engineer born in South Dakota had encountered many of the world’s oil-rich despots. Renowned for his reserved, focused and analytical manner, he had run all those negotiations just the way he ran ExxonMobil itself – with clockwork efficiency. Oil, according to ExxonMobil’s textbook, never surprises; principles never changed, only the circumstances. Vladimir Putin, Raymond believed, was no different from other authoritarians except that he had nuclear weapons and controlled the world’s biggest oil and gas reserves. That justified the flight from Dallas and the unpleasantness of meeting another stranger.

Although outspoken and prone to steamroller those he disdained by the sheer weight of his intelligence, Raymond was awkward in the limelight. No concessions were offered to friends or opponents. Unglamorous and conscious of his harelip, he personified the arrogance which united the oil world in hatred, envy and admiration of ExxonMobil. Imbued with ExxonMobil’s genes, Raymond’s sense of the world was insular. Most non-Americans, in his opinion, especially those from the Third World, were disagreeable.

Today, however, was not the moment to betray his prejudices. Other heads of state had been exposed to his scorn, but, nearing the end of his 40-year career, Raymond ached to clinch this deal. If, as expected, Putin agreed in principle to ExxonMobil’s $45 billion offer, the company’s status as the world’s biggest oil corporation would remain unchallenged. Merit and the odds, Raymond calculated, were tilted in his favour.

For 18 months a small team under Rex Tillerson, Raymond’s deputy and heir apparent, had secretly vetted Yukos, a private Russian company which produced 20 per cent of the country’s oil. During his negotiations with Mikhail Khodorkovsky, the billionaire Jewish oligarch who controlled Yukos with a 44 per cent stake, Tillerson, a well-dressed Texan who despite appearances was just as tough as his boss, reassured himself that the company would be an outstanding purchase. With oilfields stretching across western Siberia, Yukos was a gem.

During the last weeks, the proposition had improved beyond Tillerson’s original imagination. Putin had approved Yukos’s merger with Sibneft, another private Russian oil company. Together, they would rank fourth in the world league, controlling one third of Russia’s oil production and growing at 20 per cent every year, three times faster than Russia’s state-owned oil industries – and beyond Putin’s control. The marriage of the two companies had been blessed by Mikhail Kasyanov, the prime minister, as ‘a flagship for the Russian economy.’ Combining Yukos’s production of 2.16 million barrels a day – no less than 2 per cent of the world’s output – with ExxonMobil’s similar production would eclipse all ExxonMobil’s rivals. Tillerson’s main concern remained the Kremlin’s reaction. In mid-2003 he had asked Khodorkovsky if the deal was politically acceptable. Khodorkovsky had replied emphatically, ‘Let me take care of this. I’ve spoken to Putin and it’s OK.’ Nothing, Tillerson believed, had changed in the last three months. On the contrary – the meeting with Putin was intended to seal the deal.

Khodorkovsky’s self-confidence was reassuring to the inflexibly direct Tillerson, who would be described by Dave Godfrey, a New York lawyer representing Yukos, as a ‘caricature of the top arrogant Czar giving out that it was an honour for me to negotiate with ExxonMobil’. Having successfully established an oilfield on Sakhalin, a Russian island in the Pacific, as ExxonMobil’s most profitable operation, Tillerson felt comfortable navigating through Russia’s political and economic turbulence. Khodorkovsky, he reassured Raymond, could deliver. Naturally, Raymond did not entirely rely on Tillerson. He had met Khodorkovsky in Dallas and Moscow, and got on well with him. Money cemented their mutual respect. Raymond, like Tiller-son, was inclined to accept Khodorkovsky’s good faith. But while Raymond acknowledged that there were events he could not control, Tillerson lacked awareness of the limits to ExxonMobil’s authority. The heir, most agreed, was nicer and more personable than the chairman, but not as wise. The less kind regarded them as more or less identical ExxonMobil models, except that Tillerson smiled.

As the chairman of the world’s biggest privately owned corporation, Lee Raymond’s priority was to look after the interests of ExxonMobil’s shareholders. ‘ExxonMobil is a company, not a government,’ he would tell those who urged the corporation to consider global warming, social inequalities and international relations with the oil-producing countries. Those topics, and especially ExxonMobil’s relationships with Third World governments, had become critical in recent years. Maintaining production had become a problem for all the major oil companies – ExxonMobil, BP, Shell, Chevron and Total. ExxonMobil in particular was engaged in contractual disputes about its operations with several governments. Like all the oil majors, the company was handicapped in its search for new reserves by Third World governments refusing to grant access on acceptable terms. In the Middle East, South America and Asia, self-interested nationalism was denying ExxonMobil commercially advantageous deals. This was partly a result of Raymond and his rivals alienating the rulers of the oil-producing nations. Unable to gain access on their terms to those countries, the oil majors held back, pleading that exploiting their reserves was ‘risky’, ‘unprofitable’ or ‘unviable’. Even in Saudi Arabia, the company’s trusted partner and the world’s biggest oil supplier, there was animosity. At the end of some particularly acrimonious negotiations with Crown Prince Saud al Faisal, Raymond had become exasperated by the Kingdom’s refusal to give Exxon a fair return. ‘We have better things to do with our money,’ he snapped. ‘If you don’t agree to what I’m offering, I’m off to play golf.’

The consequences of declining oil supplies to the global economy were incalculable, and the danger of a shortage was accelerating, although ample reserves lay under the earth. Russia’s vast untapped oil reserves promised some relief from that vicious circle. Both Raymond and Tiller-son recognised Russia as representing ExxonMobil’s best opportunity to reverse the company’s recent stagnation. Khodorkovsky was offering Raymond the ultimate prize, but more was at stake than ExxonMobil’s fortunes. Access to Russia’s oil would reduce OPEC’s supremacy and its self-interested pursuit of higher prices. Ever since the collapse of the Soviet Union in 1989, Russia had been a magnet for oil prospectors, and over the previous decade the Western oil majors had negotiated profitable deals. Some were judged, particularly by President Putin, to be excessively profitable, exploiting Russia’s vulnerability after the collapse of communism. Nevertheless, oil and gas had become the cornerstones of the country’s economic growth. Winning Putin’s trust, Raymond knew, was critical to completing the deal. If he failed, the Russian president’s antagonism could contribute to jeopardising the global economy. Those wider concerns had not troubled Raymond during his negotiations with Khodorkovsky. As always, ExxonMobil’s interests were his sole concern.

Fortunately, the risk of Putin blocking Exxon’s deal with Khodorkovsky had, in Raymond’s opinion, been lifted three months earlier when the president had visited London to witness Mikhail Fridman, another oil oligarch, sign an agreement with John Browne, BP’s chief executive, to sell 50 per cent of TNK, Russia’s third largest oil company, for just $10 billion. Raymond did not underestimate the importance of that deal, which was the largest ever foreign investment in Russia. It confirmed Putin’s favourable predisposition towards BP and, irritatingly, Browne’s decisive influence over the industry. Since 1998 Browne had not only transformed BP from an also-ran into a major challenger to Exxon, but by acquiring American oil companies he had set the pace. Raymond’s ambitions were frequently compared to Browne’s achievements.

‘He’s a bandit,’ Raymond had said in testament to the diminutive Browne’s tough negotiating skills in Alaska, where Exxon and BP shared pipelines and other facilities. Raymond disliked the Englishman’s aggressive takeovers, belligerence and business model. Although both had earned their reputations cutting costs, he dismissed Browne as a generalist and a non-engineer. ‘We don’t have hero leaders like BP,’ Raymond’s associates would observe. ‘BP,’ Raymond would say, ‘will have its moment of truth.’ Some suspected that Raymond’s unease sprang from his disapproval of Browne’s homosexuality. While tolerated within Exxon, homosexuals were barred from claiming partnership benefits for expatriate expenses and services, and overt displays of their sexual preference were discouraged. Raymond refused to add sexual orientation to Exxon’s non-discrimination agenda. Others believed Raymond was irritated by Browne’s transformation of BP from a withered wreck to challenge Exxon’s rank as number one. After two groundbreaking takeovers, a successful rebranding of BP as an environmentally friendly corporation, and big oil strikes in the Gulf of Mexico, there were rumours about Browne seeking a merger between BP and Shell to claim Exxon’s crown as the world’s largest oil producer. Closing the Yukos deal would terminate that menace.

‘If BP can do it, anyone can do it,’ was the attitude among the Exxon executives waiting for Putin in New York. ‘BP’s deal is borderline, and Exxon can do better.’ Mikhail Fridman, a tough operator, had offered TNK around the industry before BP bit, but Yukos was more enticing. The irritant was Browne’s success. Like Exxon, in the aftermath of the TNK purchase all BP’s smaller rivals, including Total, ConocoPhillips and Chevron, felt compelled to find a similar deal in Russia.

In common with all the oligarchs, Khodorkovsky had obtained his original fortune illicitly. Smart, intelligent and arrogant, he was not flashy. Despite his wealth, estimated by Forbes to be $8 billion, the 40-year-old owned no yachts, was driven in a standard S-class Mercedes and a small BMW, employed just one bodyguard, owned only one house in Zhukovka, the billionaires’ enclave outside Moscow with its own clubs and restaurants, and was entranced by the latest electronic gadgets and toys. He was never seen flaunting a mistress, owned only one private jet, and, like all Russia’s billionaires accustomed to the wreckage caused by vodka, he rarely drank. His ambitions nevertheless were serious. Since buying Yukos for $350 million in 1995 he had, with the help of Joe Mach, an abrasive and brilliant American oil engineer hired from Schlumberger, the world’s biggest provider of services to the oil industry, transformed the company’s fields by re-educating the Russian engineers. Previously large amounts of oil had been stolen by the oilfields’ managers and organised criminals, and no one cared about water contaminating the wells. The oligarchs, many suspected, merely wanted to strip the assets and carelessly allow oil production to decline. Khodorkovsky had transformed Yukos into Russia’s best oil company. Valued at $1 billion in 1999, it was worth $40 billion by 2003, and he retained a 44 per cent stake. Overseeing 100,000 employees from his gleaming headquarters, Khodorkovsky would quietly listen to advice, never yell, and never waste time with stupid ideas. Driven by ambition, he had stopped his public relations managers propagating the message of beating Lee Raymond and turning Yukos into Exxon, instead promoting the idea of selling stakes in Yukos as a stepping stone to political power in Russia.

Khodorkovsky’s ambition to topple Vladimir Putin was undisguised. During his conversations with Raymond in Moscow in early 2003, he anticipated his supporters winning 40 per cent of the seats in the Duma, the Russian parliament, and himself becoming prime minister after the elections in December that year. By June 2003 he was assumed to have bribed sufficient members of the Duma, including some of Putin’s supporters, to defeat the government’s legislation on tax reform. If the legislation became law, Khodorkovsky was heard to predict, Putin would ‘get fired’. Putin’s irritation had not troubled Khodorkovsky, and relations between the two had deteriorated as the oligarch flaunted his ability to bribe members of the Duma in the months before the elections. Russia’s internal strife did not concern Exxon’s chairman, although he knew that the Kremlin was the only obstacle to a deal. ‘I’ll look after the government,’ Khodorkovsky had reassured Raymond. ‘Don’t rely on that,’ Raymond was advised. ‘We need our own approach.’ Other than Putin himself, only three other people could decide Yukos’s fate, and those power-brokers, everyone assumed, were not sure themselves what would happen next. Igor Sechin was among those who could provide reassurance.

Igor Sechin was Putin’s trusted ‘Mr Oil’ in the Kremlin, the gatekeeper to Russia’s oil policy. The two had become friends while working together for the mayor of St Petersburg, Anatoly Sobchak, during the Yeltsin era. Sechin was also chairman of Rosneft, a state-owned oil company. A key member of the ‘siloviki’, the St Petersburg crowd of hard-faced former KGB and military officers surrounding Putin in the Kremlin, 43-year-old Sechin was regarded by outsiders as disdainful of the Jewish oligarchs who controlled about 50 per cent of Russia’s economy. Convinced that Sechin would oppose a deal between Yukos and Exxon, Exxon’s representatives in Moscow had sought an alternative route through the Kremlin’s hierarchy to secure Putin’s approval. Igor Shuvalov, Putin’s economic adviser, was chosen as the conduit. Based at Old Square, the former Communist Party headquarters linked to the Kremlin by an 800-yard tunnel, Shuvalov had heard about Exxon’s ‘equity investment’ in Yukos soon after Khodorkovsky initially approached Tillerson. Since the size of Exxon’s proposed stake was deliberately concealed, he had no reason to object. ‘I will inform the boss and get back to you,’ he had said. One week later, Shuvalov telephoned Exxon’s office: ‘This is interesting. We are supportive.’

Since then, greed had infected the negotiations. As Exxon’s experts grasped Yukos’s true value, caution was abandoned. A desire for a 20 per cent stake was replaced by wanting everything. ‘We hunt for whales, not sardines,’ said Raymond. ‘We won’t be a junior partner in Russia. We’ll only invest in Russia when the terms are right.’ Khodorkovsky also became greedy. Aware that the oil majors needed new reserves and were envious of BP’s deal, he wanted top dollar for his shares. The timing, he said, was perfect. The rouble had devalued, and Yukos was aggressively valued. At $35 a barrel, oil prices, he believed, were peaking. Like every oil executive, he could not imagine where oil prices were heading over the following five years.

In June 2003, Khodorkovsky anticipated success. To celebrate Yukos’s record profits, he rented a luxury yacht to sail from Moscow to St Petersburg. Four days later, his business partner Platon Lebedev was arrested and charged with fraud. ‘Don’t worry,’ Khodorkovsky told his entourage. ‘He’ll be in jail for three months and then we’ll get him out.’ No one was quite sure whether Khodorkovsky genuinely believed his own bravado, but he refused to flee Russia. ‘I’m not going to become the next insane Berezovsky,’ he said, referring to the oligarch who, after helping Putin to power, fled as a permanent exile to London. In the event Lebedev was found guilty of tax evasion and sentenced to eight years’ imprisonment.

Raymond remained oblivious to the changing mood. Unlike John Browne, he was unversed in Russian culture and sensitivities. While Browne respected Russian history, Raymond saw a greenfield site. Exxon lacked experts who could provide genuine insight about the Kremlin’s intentions, especially Putin’s ambition to use the world’s dependence on Russia’s energy resources as a tool to reassert the nation’s status as a superpower. Whether Putin regarded Khodorkovsky as a serious obstacle to that ambition in summer 2003 is uncertain. Raymond did not suffer any misgivings. Impervious to subtleties, he approached the final deal, as always, by squeezing sentiment out of the negotiations. In July 2003 he visited Putin in the Kremlin. His pitch to the president was familiar: ‘We can help you elevate your country by extracting your oil resources.’ During that visit Mikhail Kasyanov, the prime minister, assured Raymond that Exxon would be allowed to buy a stake in Yukos.

Raymond, accustomed to negotiating with kings and presidents as an equal, shared their lifestyle. Arriving in Moscow with six bodyguards, he secured motorbike outriders from Moscow’s police department for his limousine’s dash into the city, and the whole top floor of the Kempinsky, Moscow’s most expensive hotel, was assigned to him. Putin would be intrigued to hear about two eccentricities during that visit. Since Raymond intended to leave Moscow on a Sunday, the city’s Baptist church was opened on Saturday to allow him and his wife Charlene the chance to pray.

During a previous visit to Moscow, Charlene had spotted some sculptured wooden figures in a store which she wanted to inspect again. Exxon’s security officers had declared that revisiting the store was excessively dangerous, so arrangements were made just prior to the Raymonds’ arrival for a room on the Kempinsky’s top floor to be converted into a display and filled with 60 wooden sculptures. After nearly two hours in the room, Charlene announced, ‘Yes, I’ll take them.’

Exactly 30 minutes late, Putin entered the Waldorf suite, accompanied by Igor Shuvalov, Sergei Priodka, a foreign affairs adviser, and the Russian ambassador in Washington. Putin would have been conscious that he was nearly the youngest in the room. He and Raymond shared a three-seater divan, while Rex Tillerson and Anna Kunanyansay, Exxon’s Russian-speaking adviser, took chairs. Kunanyansay, a Jewish émigrée from Kiev, had made the arrangements with the Russian ambassador for the meeting. Trusted by Lee and Charlene Raymond, she was suspicious of Putin.

After a few minutes’ pleasantries, Raymond cut to the chase. His tone was deferential, but not obsequious. ‘As you know, Mr President, we have been in negotiations for some time with Yukos.’

‘Yes, I know,’ said Putin. ‘For 25 per cent of the shares plus one share. A minority stake.’

‘Well, Mr President,’ replied Raymond, ‘I think we must be clear. I want you to understand that we will only buy 25 per cent if we can see a way to buy total control, and that’s why I’m here to see you today. To check that that’s OK with you. Our ultimate goal is to buy a majority stake in Yukos.’

Putin did not flinch visibly, but the translators heard exasperation in his reply, ‘This is the first time I’ve heard that. Khodorkovsky didn’t tell me.’ Raymond pursued his theme, explaining that the deal would improve Russia’s relations with America. ‘Well, we’ll see,’ said Putin evasively. ‘These details are for my ministers. You must deal with them.’ Raymond was not discouraged. Putin’s impatience was lost in the translation, and he had not actually rejected the idea of a deal. Raymond failed to spot the significance of Putin repeating three times: ‘This is the first time I heard about this. Khodorkovsky never told me about this.’

On 26 September, after meeting leaders of the American business community including Raymond at the New York stock exchange, Putin flew to see President Bush at Camp David. While he was there he mentioned Exxon’s bid for Yukos, and found to his surprise that Bush was unaware of the deal. Putin did not know that ever since Standard Oil was dismantled by the US government in 1911, American oil men had been indoctrinated not to confide unnecessarily in government officials, including the president. Inevitably, the rule was broken whenever Exxon needed Washington’s help. After all, despite the corporation’s culture of distrusting governments, America was at the centre of its universe.

Five days later, Raymond arrived in Moscow to participate in a meeting of the World Economic Forum starting on 2 October. He was to share a platform with Khodorkovsky. Putin and Roman Abramovich, the oligarch and co-owner of Sibneft, would be in the audience. Before Raymond left Dallas, Khodorkovsky’s demand for $50 billion for his shares had been considered. Raymond, the master of the hard bargain, declared that he would offer $45 billion. The Exxon team flying to Moscow were confident that the deal would be finalised and announced during the conference. Publicists were drafting the announcement.

On the top floor of the Kempinsky, Raymond waited for Khodorkovsky to haggle over the $5 billion. Khodorkovsky had heard a garbled report of the meeting between Raymond and Putin in New York, which was described as ‘the final nail in the coffin for Khodorkovsky’s relationship with the Kremlin’, and ‘the beginning of the end’. Khodorkovsky showed no concern, even after Yuri Golubev, the chain-smoking, heavy-drinking cofounder of Yukos, heard from a Kremlin official that ‘the meeting in New York was bad’. Raymond was regarded as having been excessively blatant, and Golubev heard that Putin felt misled by Khodorkovsky, and annoyed at being placed in an ‘uncomfortable position’ by Raymond’s ‘inappropriate behaviour’. Self-interestedly, Golubev did not mention to Khodorkovsky Putin’s anger at the oligarch’s failure to mention Raymond’s true ambition.

In reality, the situation was worse than Golubev imagined. On his return to Moscow Putin had summoned a meeting. Poring over an ‘oil map’ stretched across a conference table, his experts identified the existing foreign ownership of Russia’s oilfields. BP’s recent deal with TNK and Exxon’s prospective purchase of Yukos and Sibneft would place half of the Siberian oilfields under Western control. Oil and gas made up 40 per cent of Russia’s exports. Putin became agitated, and rejected the arguments of the modernisers in his government that Western oil majors were more efficient than Russian producers, and their claim that Russia would retain all the profits through taxation. Suspicious that Exxon was conspiring to threaten Russia’s national interest, Putin reflected the familiar mixture of Russian attitudes towards the West – simultaneously craving respect while suffering an inferiority complex. The notion of Russia’s oil being under Western control sparked his insecurity, envy and resentment. His grievances were echoed by the ‘Grey Cardinals’, his xenophobic ex-KGB cronies. Like their predecessors employed by Yeltsin, they lusted for personal wealth. Allowing ExxonMobil to move further into Russia threatened their ambitions, which were already limited by BP’s deal. By September, Putin was becoming convinced that Khodorkovsky had planned for two years to fund his takeover of Russia by selling Yukos. The president feared that Khodorkovsky could even buy the prosecutor general, or at least organise his dismissal. The resurgence of Putin’s national conscience had been anticipated by a handful of realists in Yukos’s hierarchy: ‘It’s all crazy to think Putin will allow a crown jewel to be sold to foreigners to benefit a group of Jewish bandits.’ But Khodorkovsky, they agreed, was ‘running high’. The turbulence influenced Khodorkovsky’s negotiations with Raymond.

Khodorkovsky arrived at the Kempinsky with his trusted translator Peter Laing. Over two hours he argued with Raymond about the $5 billion. Reams of paper were covered with figures as the translators interpreted the sums. ‘Ego’, one of the translators would say, was preventing the two men splitting the difference. ‘They’re chiselling,’ he concluded. Unwilling to concede, Raymond stormed out of the room and slammed the door of his bedroom without saying goodnight. In hindsight, he would conclude that Khodorkovsky was double-dealing, dangling an alternative deal to Chevron. ‘The meeting did not go well,’ Khodorkovsky told his staff after returning from the hotel. ‘We won’t be able to do the deal with Exxon the way they want, but let’s keep them involved to keep the pressure on Chevron.’ By then, Khodorkovsky’s fate had been sealed.

In that familiar territory, few were surprised by the news on Saturday, 25 October. Late that night Mikhail Khodorkovsky’s private plane was ‘delayed’ on the tarmac in Novosibirsk, Siberia. Suddenly, a group of masked security officers burst into the plane, shouting ‘Weapons on the floor or we’ll shoot!’ Khodorkovsky was arrested on charges of fraud and tax evasion. His arrest prompted his close associates to flee to Israel and the USA. ‘This is the signal that politics has trumped even the appearance of rule of law,’ said Robert Amsterdam, Khodorkovsky’s American lawyer. But Khodorkovsky’s arrest was popular in Russia, except among the other oligarchs, many of whom fled overseas in their private jets to watch events unfold in safety. Mikhail Fridman arrived in Mexico that night on a private jet, for a planned holiday with friends.

Rex Tillerson shed no tears. He shared Khodorkovsky’s contempt for the swamp of corruption among ministers with no interest in the country; but he also had no sympathy for the oligarchs. Raymond was upset that his conversation with Putin in New York may have caused Khodorkovsky’s arrest, not least because the Kremlin began pursuing Russians employed by Yukos, causing several to flee to the West. But he expressed no concern that the meeting had contributed to triggering the oil industry’s renationalisation, changing the atmosphere for Western business in Russia. ‘If they don’t understand, then they’ll have to learn,’ Raymond told an aide. ‘We won’t be a junior partner in Russia. We’ll only invest when the terms are right.’

In December, Tillerson acknowledged the deal was dead. Yukos was under investigation for tax evasion and Khodorkovsky was charged with serious offences. ‘Russia is closed,’ announced an Exxon executive. ‘It’s impossible to put the genie back in the bottle.’ Western shareholders were about to lose billions of dollars. Putin had done more than terminate a deal; he had curtailed the immediate modernisation of Russia’s oil industry with Western technology and the chance to balance OPEC’s power. Ten years after President Clinton exploited America’s Cold War victory to prise the oil reserves around the Caspian Sea from Russian influence, Putin had begun to reverse the humiliation. Russia’s prestige and power, he decided, depended upon high energy prices or, more potently, refusing to commit his government to satisfying all Europe’s energy requirements. Security of supply rather than the price of Russia’s oil and gas would determine the fate of the world’s economy. Satisfying the increasing global demand for oil partly depended on increasing Russia’s oil production from 10 million barrels a day to 12 million. That increase hinged on Khodorkovsky’s modernisation of Yukos. After Khodorkovsky’s arrest, Yukos’s self-improvement programme gradually withered, Russia’s oil production slipped and China’s growing demand could not be satisfied. Unforeseen, the débâcle contributed to the oil crisis in 2008 and the global recession.

By then Raymond had retired with a record $398 million payoff and pension. Looking back on his Russian experience, he could draw on the Exxon homily that there was nothing new in oil – only the players in each country were different. In the balance of risk, he had won some and lost some, but the cycle had never changed. Exxon was in better shape than it had been when he had taken over. In his Exxoncentric manner he ignored the problems he had created. The mergers and consolidation among the oil majors orchestrated by himself and John Browne had created a new arrogance and blindness towards the oil-producing countries, alienating their governments from granting the oil majors access to their reserves. Putin’s reaction against Exxon was echoed by governments across the globe. In unison, they regarded Exxon, BP and Shell as selfishly unwilling to share their profits. More pertinently, Raymond and Browne, while worshipping the cycle, had misjudged their scripture.

Both had inherited similar lessons about limiting risk. Their forefathers, they had been taught, had been scorched during the 1960s by investing too much. By the late 1970s the industry was hampered by bottlenecks. Mastering the cycle, Raymond and Browne knew, was perilous, just as predicting oil prices was impossible. Their predecessors had failed to foresee the collapse of oil prices in 1986, 1993 and 1998, and none had anticipated the huge increases after 1973. Learning the lessons had proved difficult. In 2003, Raymond and Browne did not anticipate that the cycle had again turned and prices would rise. More eager to instantly satisfy their shareholders than to care for the long-term security of oil supplies for Europe and the United States, both were buying back shares rather than investing in new oilfields. They would blame oil nationalism for preventing efficient exploration and production, but Raymond’s insensitivity towards Putin justified the president’s suspicion.