Saturday, March 3, 2018

Exxon Oil Deal with Russia Falls Through

Despite the Trump administration's efforts, the half trillion dollar Exxon oil deal with Russia has finally succumbed to sanctions.

There is evidence to suggest that the fossil fuel venture may have been the financial impetus behind Russian interference in the US election in 2016. It is an incontrovertible fact that the Russian government used their resources to support the candidacy of Donald Trump. There are good reasons to believe that this deal may have played a role in this extraordinary breach of US sovereignty that some have called an act of war on a par with Pearl Harbor.

Vladimir Putin

There are mutiple dimensions to the highly questionable relationship between the Trump administration and Russian dictator Vladimir Putin. These issues are currently being scrutinized by special investigator Robert Mueller.

In addition to medling in foreign elections, and war in both Syria and the Ukraine, the Russian strongman is well known by environmentalists for his ambition to extracxt resources in the fragile Arctic. Putin has had his sights set on extracting Arctic oil for some time. He started lining up investors more than five years ago. Since at least 2012 Putin has been preparing to benefit from global warming as the ice melts and valuable Arctic resources become  accssible.  To back up his Arctic ambitions he has moved significantly more state and military assets into the region than any other nation.

The deal

The partnership between Russia's state-owned Rosneft and Exxon Mobil Corp. was signed in Moscow in August 2012. The $500 billion deal between the two oil giants included three fields in the Arctic. In 2014 Exxon began drilling in Russia's Arctic despite Western sanctions on Rosneft over the Ukraine crisis (Russia annexed Crimea and engaged in a proxy war with the Ukraine). These oil drilling operations were subsequently halted as the sanctions noose tightened.

As revealed in a recently published Exxon report, several joint ventures with Rosneft PJSC have been abandoned. This is a serious blow for Exxon which has drilling rights to 11.4 million acres (46,134 square kilometers or 17812 square miles) of Russian territory.

There is evidence to suggest that Russian support for Trump may have been, at least in part, about gaining access to billions of dollars of oil in Russia. Exxon's technology is required to extract the oil, particularly in the Russian Arctic. Trump may have been seen as a way to get around sanctions.

Tillerson failed to deliver

Rex Tillerson, is the former CEO of Exxon and the man who brokered the deal with Rosneft. Tillerson has longstanding oil ties with Putin and this may be the reason he was tapped to be Secretary of State. Tillerson was awarded the Russian government's Order of Friendship after he signed an agreement to drill for Arctic oil in the Kara Sea. It should also be noted that Tillerson was the only American official to join Trump at the G20 meeting in Germany.

Was Tillerson nominated to be Secretary of State to remove the sanctions and enable Exxon to drill in Russia? Tillerson's efforts both before and after being nominated are consistent with this hypothesis. His opposition to sanctions against Russia has not wavered even in the face of Russian meddling in the election of 2016. The Trump administration also refused to impose further sanctions on Russia despite an overwhelmingly popular bipartisan resolution that passed in both chambers of Congress. Tillerson did all that he could to allow the Exxon-Rosneft deal to move forward but he failed. After having invested so much energy into Russia, as both CEO of Exxon and now Secretary of State, Tillerson's dream of Russian oil appears to have died.

Tillerson's questionable conduct extends beyond his role as Secretary of State. He was at the helm of Exxon as the company hid climate data.  During confirmation hearings Tillerson equivocated about climate change and refused to answer a question about Exxon's efforts to obscure science. It is now clear that Tillerson was guilty of climate obfuscation while at the helm of Exxon.

Exxon's malfeasance

Like Tillerson, Exxon has done all it can to get around the sanctions. As reported by the Hill last April, Exxon requested a waiver from the Trump administration to exempt them from sanctions. In July the Times reported that Exxon was fined for violating sanctions against Russia.

Exxon's crimes against humanity go way beyond its dealings in Russia. In fairness so do the crimes of the whole fossil fuel industry. Exxon is a key contributor to climate change by some estimates it is responsible for 5 percent of the world's anthropogenic carbon load.  The court mandated release of Exxon's own documents revealed that the company has known about its carbon impacts for many years.

The oil company's malfeasance does not end there.  New York's attorney general accused the oil giant of cooking the books while Tillerson was CEO.  Exxon is accused of having one set of carbon pricing for shareholders and another that was used internally. This sham accounting contributed to the "false and misleading" statements that were made to shareholders.

On May 31, just ahead of Trump's decision to withdraw from the Paris Climate agreement, Exxon stockholders overwhelmingly passed a resolution demanding that the company be more transparent about climate risks.

One of Exxon's corporate responsibility advisors resigned over what he called "targeted attacks" on NGOs and Exxon was fined for releasing ten million pounds of air pollution in Texas.

Exxon has also been beset by a number of problems not the least of which is the decline in oil prices. Although they have recovered somewhat, the low oil prices forced Exxon to abandon plans to develop significant amounts of its tar sands assets.

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