Kokh on Sechin’s Rosneft Ambitions

Alfred Kokh wrote a post on his Facebook wall yesterday about Rosneft and what Sechin’s own personal ambitions are costing the Russian people:

I want Russians to clearly understand the price they are paying for the tyranny and ambition of their rulers. Let me give a simple example.

Once upon a time, there was TNK-BP. It produced oil, and paid taxes. The general opinion was that it was one of the most efficient [companies] in Russia. And then the big boss Sechin (a close friend — the best friend — of Putin), head of the state-owned Rosneft, decided that Rosneft should buy TNK-BP.

I note that there was no benefit to the state here: TNK-BP generated taxes and other payments to the state budget — and generated a lot…. The acquisition of TNK-BP was the personal ambition of Sechin. In this (I repeat) there was no public benefit.

Sechin took loans from Western banks for $40 billion and bought TNK-BP. Life seemed beautiful and serene to him: he became the chief of the largest petroleum company in Russia (and according to some estimates — in the world), and fancies himself a strategic player on a universal scale.

But then disaster struck — oil prices fell four times. And kept falling… this happens sometimes to prices once every 20 or 30 years. But Sechin and Putin had for some reason decided that God was pleased with them and this wouldn’t happen to them.

Why they decided this is unknown. But they so believed in their own good luck that they even had the feeling that they controlled the price… but in the world of course, God is not a simpleton and their luck ended. It turned and they taste the bitter bread of heavy debts and greedy lenders.

Now Rosneft actually pays nothing to the budget: all the profits go to Western banks in loan repayments: the total debt of Rosneft is more than $60 billion. Moreover Rosneft is now the state’s, it takes money for its projects from the [state] reserves. And they even have to increase the price of gasoline — or they’ll go bankrupt….

And yet none of this would have happened if it were not for the personal ambitions of Sechin. If he had not wanted to buy TNK-BP, Rosneft would not have fallen into debt. And it would not have debt service payments to the banks. And it would not need to borrow from the Reserve Fund of the Russian Federation, but on the contrary, Rosneft would be paying into the state budget taxes and fees…

And now Russia’s taxpayers are obliged to pay for these ambitions. And meanwhile Sechin is paying himself a salary as if he really were a great manager who had created a highly efficient company — a world leader, and not a giant loss-making monster that destroyed its monopoly (40% of the market), competing on the Russian market of oil and oil products…


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