Igor Sechin: Rosneft’s Kremlin hard man comes out of the shadows

For much of his career Igor Sechin – a former Soviet spy and close ally of Vladimir Putin – has been a man in the shadows. During Putin’s first presidential stint, the joke doing the rounds in Moscow was that Sechin didn’t actually exist: instead, US diplomats mischievously suggested, he was a sort of urban myth, a bogeyman invented by the Kremlin to instil fear.

Today, however, Sechin, the chairman of Rosneft, has taken another step away from the dark. He has offered a deal that would see Rosneft acquire BP‘s stake in its troubled Russian joint venture TNK-BP, with BP in return acquiring 10%-20% of Rosneft. The Russian company has reportedly offered BP $28bn in shares and cash. Sechin has overseen the deal himself: he flew from Moscow to London on Wednesday night.

The tie-up would see Rosneft leap from near-obscurity just over a decade ago to become the world’s biggest publicly traded oil company – an extraordinary rise that can only be put down to Sechin himself.

During Putin’s first two presidential terms, Sechin was Putin’s deputy chief of staff. In 2008 Dmitry Medvedev – Putin’s weak temporary successor – made Sechin deputy prime minister, a demotion. When Putin came back to the Kremlin in May, many were surprised when he failed to offer Sechin a government job.

But Sechin’s official positions in Russia‘s hierarchy understate his real influence. During the Putin era it is Sechin who has been in charge of Russia’s energy sector, up until 2008 operating largely from behind the scenes. His power flows from his perceived closeness to Putin. Not only are they friends with a common KGB heritage but, according to leaked US diplomatic cables, they also share “economic interests”.

Sechin is widely regarded to be the head of the Kremlin’s siloviki clan, made up of nationalist hardliners with a security or military background. He is a proponent of strong state control, especially in the energy sector. The siloviki are at odds with a modernising camp inside the Kremlin, some analysts suggest, who favour greater economic liberalisation and Russia’s integration with the west. Putin, meanwhile, plays the role of intra-elite arbiter, balancing the interests of both factions.

Others, however, dismiss this as rubbish. They say the internecine struggles inside the Kremlin are not about political philosophy or ideology, but merely battles between rival clans trying to divide up the spoils. (In Russia, the spoils amount to billions of dollars.)

Sechin has often been seen as a competitor to the moderate Medvedev within Russia’s ruling elite. More realistic, however, is the scathing view that Medvedev was only ever the “number three guy” – behind Putin and Sechin in terms of power and influence.

To his enemies, Sechin is a malevolent figure, a Kremlin grey cardinal crossed with the Big Bad Wolf. The charge list against him goes something like this: it was Sechin who personally engineered the demise of the oil giant Yukos in 2003, and the jailing of its billionaire owner Mikhail Khodorkovsky. (Rosneft promptly swallowed Yukos’s assets; Khodorkovsky is still in jail.) Sechin also led the siloviki’s opposition to foreign investment in Russia, especially in oil and gas. And there are suspicions that it is Sechin who has directed oil exports towards the murky Swiss-based oil trader Gunvor, while sidelining other customers.

But there are pluses as well. In a 2009 John Beyrle, then US ambassador in Moscow, listed some of Sechin’s achievements. He had, the ambassador wrote, “unquestionably transformed Russia’s most dismal oil company into a globally competitive state champion (albeit with Yukos’s assets)”, adding that “he also protected Rosneft from a putative merger with Gazprom in apparent contradiction of Putin’s desires”. The ambassador cited further examples of Sechin’s “enlightened management” – he listens to minority shareholders, unusual in Russia, and even hired an American as Rosneft’s chief financial officer. The diplomatic cables, though, reveal that a frustrated US government has had “virtually no interaction” with Sechin.

It is too early to parse just what the BP-Rosneft deal means. But Sechin appears to have recognised that Rosneft can only become a major global champion with international investment and expertise. Russia is still the world’s largest producer and exporter of hydrocarbons. But the country’s energy sector has stood still for some time, and may even be slipping backwards – with oil production stagnant, underinvestment in exploration and production, and heavy-handed state control.

In common with other suspected former KGB officers, Sechin’s biography is something of a mystery. Putin famously spent the 1980s as a KGB liaison officer in communist east Germany and Dresden; Sechin – a languages graduate from Leningrad state university – was stationed in Mozambique. After the collapse of the Soviet Union, he worked in the mayor’s office at St Petersburg. When Putin became first deputy mayor, Sechin became his chief of staff in 1994; he has been at Putin’s side ever since.

Putin is now set to stay in the Kremlin until 2018, and possibly until 2024. Sechin, then, will remain at the summit of Russian oil power for some years to come.

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