Exxon chief fa­vored to head State

Rex Tiller­son’s ties to Rus­sia’s Putin worry some GOP sen­a­tors.

The Denver Post - - FRONT PAGE - By Steven Muf­son, Philip Rucker and Carol Morello

Pres­i­dent-elect Don­ald Trump is ex­pected to name Rex Tiller­son, the chief ex­ec­u­tive of Exxon Mo­bil who has worked ex­ten­sively around the globe and built re­la­tion­ships with such lead­ers as Rus­sian Pres­i­dent Vladimir Putin, as his sec­re­tary of state, three peo­ple close to the tran­si­tion team con­firmed Satur­day.

Tiller­son’s nom­i­na­tion could face in­tense scru­tiny in the Se­nate con­sid­er­ing his years of work in Rus­sia on be­half of the multi­na­tional pe­tro­leum com­pany and his close ties to Putin. Al­ready, two lead­ing Repub­li­can hawks, Sens. John McCain of Ari­zona and Lind­sey Gra­ham of South Carolina, have voiced con­cerns about Tiller­son serv­ing as the na­tion’s top diplo­mat.

Trump spokesman Ja­son Miller said Satur­day that there would be no of­fi­cial an­nounce­ment un­til this com­ing week “at the ear­li­est.”

But three of­fi­cials briefed on Trump’s de­lib­er­a­tions, who spoke on the con­di­tion of anonymity be­cause of the sen­si­tiv­ity of the mat­ter, said that the pick would be Tiller­son bar­ring a late shift in Trump’s think­ing. NBC News first re­ported that Trump has set­tled on Tiller­son.

Trump spent a month de­lib­er­at­ing over the sec­re­tary of state po­si­tion and in­ter­viewed an ar­ray of can­di­dates, in­clud­ing Mitt Rom­ney, the 2012 GOP pres­i­den­tial nom­i­nee and one­time critic who was the face of the Repub­li­can re­sis­tance to Trump’s can­di­dacy.

The pres­i­dent-elect set­tled on Tiller­son be­cause he projects grav­i­tas, is re­garded as a skill­ful man­ager and per­son­ally knows many for­eign heads of state through his deal­ings on be­half of the en­ergy gi­ant, peo­ple close to Trump said.

In an ex­cerpt of an in­ter­view with Fox News, which will be aired in full Sun­day, Trump praised Tiller­son, though did not re­veal his de­ci­sion.

“He’s much more than a busi­ness ex­ec­u­tive; he’s a world-class player,” Trump said. “He knows many of the play­ers, and he knows them well. He does mas­sive deals in Rus­sia — for the com­pany, not for him­self.”

Tiller­son’s nom­i­na­tion would fit the pat­tern of other Trump ap­point­ments, in­stalling a wealthy busi­ness leader with lit­tle ex­peri-

ence in pol­i­cy­mak­ing. But Tiller­son, 64, has spent much of his ca­reer deal­ing with the com­plex­i­ties of one of the world’s big­gest en­ter­prises, span­ning six con­ti­nents and about six dozen na­tions.

The com­pany’s deep ties to Rus­sia would po­ten­tially serve Tiller­son well given Trump’s de­sire to re­pair re­la­tions with the Krem­lin. But Tiller­son’s close re­la­tion­ship with Vladimir Putin could also be­come a flash­point dur­ing con­fir­ma­tion hear­ings, es­pe­cially in light of a re­cent CIA as­sess­ment that Rus­sia in­ter­vened in the 2016 elec­tion to help Trump win the pres­i­dency, rather than just to un­der­mine con­fi­dence in the U.S. elec­toral sys­tem.

“Few cor­po­rate ti­tans are closer to Putin than Tiller­son,” said Ja­son Bord­off, founder of Columbia Univer­sity’s cen­ter for global en­ergy.

Dur­ing the 1990s, Tiller­son over­saw an Exxon project on Rus­sia’s Sakhalin is­land and de­vel­oped a work­ing re­la­tion­ship with Putin. In 2011, the com­pany signed an agree­ment with the state-con­trolled oil com­pany, Ros­neft, to work jointly on oil ex­plo­ration and de­vel­op­ment in the Arc­tic and Siberia.

Af­ter ink­ing the deal in New York, Tiller­son and Ros­neft chair­man and Putin con­fi­dante Igor Sechin dined on caviar at the lux­ury Man­hat­tan restau­rant Per Se, ac­cord­ing to one ac­count. The next day they gave oil an­a­lysts black pens with the date of the agree­ment en­graved in gold.

Two years later, the Krem­lin awarded Tiller­son the Or­der of Friend­ship, hon­or­ing for­eign­ers.

“I don’t know the man much at all, but let’s put it this way: If you re­ceived an award from the Krem­lin, [an] or­der of friend­ship, then we’re gonna have some talkin’,” Gra­ham said. “We’ll have some ques­tions. I don’t want to pre­judge the guy but that’s a bit un­nerv­ing.”

Exxon dis­cov­ered oil in a well it drilled in the Kara Sea, but the joint part­ner­ship was put on ice af­ter Rus­sian in­ter­ven­tion in Ukraine and an­nex­a­tion of the Crimea led to in­ter­na­tional eco­nomic sanc­tions. As sec­re­tary of state, Tiller­son, who has been crit­i­cal of the sanc­tions, would be in a po­si­tion to ar­gue for an eas­ing them, which could al­low Exxon to re­sume op­er­a­tions.

“Rus­sia is crit­i­cal for Exxon,” said Fadel Gheit, oil an­a­lyst for Op­pen­heimer & Co. “Not only for how much pro­duc­tion it has there, but the po­ten­tial growth is huge.” He said once sanc­tions are lifted, “Exxon will go back to de­velop the Arc­tic busi­ness at a rapid pace.”

As Sec­re­tary of State, which takes the lead in in­ter­na­tional cli­mate talks, the oil in­dus­try veteran could also play a role in un­wind­ing U.S. com­mit­ments un­der the re­cent Paris ac­cord.

“The clos­est thing we have to a sec­re­tary of State out­side govern­ment is the CEO of Exxon,” Robert McNally, pres­i­dent of the con­sult­ing firm Rap­i­dan Group and a direc­tor for en­ergy at Pres­i­dent Ge­orge W. Bush’s na­tional se­cu­rity coun­cil. Be­cause ExxonMo­bil in­vests in huge, long-term projects, it is con­cerned “by na­ture with en­dur­ing in­ter­ests, vul­ner­a­bil­i­ties, and op­por­tu­ni­ties,” McNally said.

His se­lec­tion ends one of the most high-pro­file con­tests for a top cab­i­net post, whose los­ing can­di­dates in­cluded former New York mayor Rudy Gi­u­liani, Rom­ney and Sen. Bob Corker, R-Tenn.

Ca­reer at ExxonMo­bil

Tiller­son has spent his en­tire work­ing life at ExxonMo­bil af­ter earn­ing a civil en­gi­neer­ing de­gree and join­ing the com­pany in 1975. His ca­reer has taken him from Ok­la­homa and Texas to Ye­men and Rus­sia, and as ExxonMo­bil’s top ex­ec­u­tive he has cul­ti­vated re­la­tion­ships, meet­ing reg­u­larly with world lead­ers such as Rus­sian Pres­i­dent Vladimir Putin, the Saudi oil min­is­ter, and the emir of Qatar. He will re­tire with a nest egg of about $300 mil­lion in­clud­ing stock op­tions and pen­sion ben­e­fits.

Yet Tiller­son’s track record dur­ing a decade in which crude oil prices lurched from un­der $30 to nearly $150 a bar­rel - has been mixed. The com­pany has man­aged some of the world’s big­gest in­fra­struc­ture projects of­ten in for­bid­ding lo­ca­tions, but it has spent heav­ily on share buy­backs and has bor­rowed heav­ily to main­tain both cap­i­tal spend­ing and div­i­dend pay­ments. Wall Street an­a­lysts say it over­paid for XTO, a do­mes­tic shale gas com­pany, and it has failed to meet the pro­duc­tion tar­gets Tiller­son him­self set. In April, Stan­dard & Poor’s down­graded the com­pany’s gold-plated triple A credit rat­ing to dou­ble A plus, the first time Exxon had lost its triple A rat­ing since the ad­vent of color tele­vi­sion and the com­mu­nists took over China.

More­over, Tiller­son’s ca­reer with ExxonMo­bil isn’t seen as an as­set by en­vi­ron­men­tal­ists. The com­pany has be­come a tar­get of en­vi­ron­men­tal groups that al­lege the com­pany’s sci­en­tists knew about the im­pact the use of fos­sil fu­els was hav­ing on cli­mate change, and that the com­pany sup­pressed in­ter­nal re­search rather than shar­ing it with in­vestors and the pub­lic.

The New York and Mas­sachusetts at­tor­neys gen­eral have is­sued broad sub­poe­nas to as­cer­tain whether ExxonMo­bil’s fail­ure to dis­close that in­for­ma­tion vi­o­lated Se­cu­ri­ties and Ex­change Com­mis­sion re­quire­ments. ExxonMo­bil has fought back, per­suad­ing a Texas fed­eral court to or­der that ExxonMo­bil could do dis­cov­ery, de­pose the Mas­sachusetts at­tor­ney gen­eral and search her in­ter­nal emails and doc­u­ments for any signs that she acted out of “bad faith.”

“Cov­er­ing up cli­mate sci­ence and de­ceiv­ing in­vestors qual­i­fies you for fed­eral in­ves­ti­ga­tion, not fed­eral of­fice,” May Bo­eve, ex­ec­u­tive direc­tor of the cli­mate group 350.org said in a state­ment. “An oil baron as Sec­re­tary of State would do enor­mous dam­age.”

When Tiller­son took the helm at ExxonMo­bil a decade ago, he was seen as mod­er­at­ing the com­pany’s po­si­tion on cli­mate change. Whereas his pre­de­ces­sor op­posed any ac­tion on cli­mate change, Tiller­son said in 2009 that he fa­vored a car­bon tax and pro­posed an ini­tial price “some­where north of $20” a ton. And he re­duced ExxonMo­bil’s own emis­sions.

Un­der Tiller­son, ExxonMo­bil also cur­tailed fund­ing for the Com­pet­i­tive En­ter­prise In­sti­tute, whose en­ergy and cli­mate ex­pert My­ron Ebell played down the ex­tent of cli­mate change and said that no ac­tion was needed. Ebell has been the head of the Trump tran­si­tion team on en­vi­ron­men­tal is­sues.

Yet Tiller­son still in­sisted that oil use was es­sen­tial. He chaired the Amer­i­can Pe­tro­leum In­sti­tute, which ham­mered on the idea that jobs were at stake. “To say that you’re ad­dicted to oil and nat­u­ral gas seems to me to say you’re ad­dicted to eco­nomic growth,” he once told For­tune magazine.

Exxon has im­por­tant re­la­tion­ships with coun­tries other than Rus­sia, most no­tably the Mid­dle East. It re­lies on Saudi Ara­bia for oil sup­plies and is a part­ner in re­fin­ery projects. It has enor­mous liq­ue­fied nat­u­ral gas ex­port projects in Qatar. It has also man­aged to carry out ex­plo­ration and pro­duc­tion ven­tures in both Kur­dis­tan and south­ern Iraq, tran­scend­ing ri­val­ries be­tween Bagh­dad and the Kurds.

But un­der Tiller­son, Exxon has also walked away from some coun­tries. It left Venezuela af­ter con­tract dis­putes with the late Venezue­lan leader Hugo Chavez and it ended its on­shore op­er­a­tions in Nige­ria, where lo­cal in­sur­gents sab­o­taged in­fra­struc­ture.

Tiller­son said later that “you have to be will­ing to say ‘no, we aren’t go­ing to do it that way...if we can’t do it this way, we won’t be here.’”

Within the oil in­dus­try, ExxonMo­bil has been re­garded as the most but­ton-downed com­pany, con­ser­va­tive and some­times ar­ro­gant.

“Honor­able man”

“Rex is a very, very, very honor­able man,” said Gheit, who is also one of his crit­ics. “He is smart, level headed. He has tremen­dous re­solve and very strong char­ac­ter.”

Tiller­son was born in Wichita Falls, Texas, the son of a Boy Scout ad­min­is­tra­tor. He still lists the rank of Ea­gle Scout on his re­sume, and he has re­mained ac­tive in the or­ga­ni­za­tion through­out his life. In 2012, he was in­stru­men­tal in push­ing the Boy Scouts board to ad­mit openly gay youths.

The Exxon chief also chaired the $50 mil­lion cam­paign to re­store Wash­ing­ton’s Fords Theatre, where Pres­i­dent Lin­coln was as­sas­si­nated. ExxonMo­bil and Qatar were ma­jor donors.

In con­fir­ma­tion hear­ings, Tiller­son can also ex­pect to face tough ques­tions about his views on in­ter­na­tional pipe­lines such as the Key­stone XL, which re­quire State Depart­ment ap­proval. He’ll also be quizzed on cli­mate change.

“I’d ex­pect the State Depart­ment’s cli­mate change en­voy- a key role un­der [Hil­lary] Clin­ton and [John] Kerry-to have a lot of free time on his or her hands, and that State Depart­ment per­mits to build oil pipe­lines to Canada will be quite a bit eas­ier to get,” Bord­off said.

Tiller­son has ac­knowl­edged that cli­mate change is caused by humans, but ques­tioned the costs of wean­ing the world from fos­sil fu­els.

“What good is it to save the planet if hu­man­ity suf­fers,” he said at a 2013 stock­hold­ers meet­ing, cit­ing the out­sized im­pact on poor peo­ple if en­vi­ron­men­tal ac­tivists suc­ceeded in es­tab­lish­ing com­pany goals to re­duce emis­sions.

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