The Squeeze: Oil, Money and Greed in the 21st Century

TOM BOWER

The Squeeze
Oil, Money and Greed in the Twenty-First Century

DEDICATION

To George and Sylvia Bower

CONTENTS

Cover

Title Page

Dedication

Preface

1. The Emperor

2. The Explorer

3. The Master Trader

4. The Casualty

5. The Star

6. The Booty Hunters

7. The Oligarchs

8. The Suspect Traders

9. The Crisis

10. The Hunter

11. The Aggressors

12. The Antagonists

13. The Shooting Star

14. The Twister

15. The Gamble

16. The Downfall

17. The Alarm

18. The Struggle

19. The Survivor

20. The Backlash

21. The Confession

22. The Oligarch’s Squeeze

23. The Frustrated Regulator

Acknowledgements

Index

Notes

By the Same Author

Copyright

About the Publisher

PREFACE
VIENNA, 28 MAY 2009

Despite the crowds of journalists and TV cameras jostling in the small entrance hall of OPEC’s Vienna headquarters, the atmosphere was mellow. After the frenzy of oil prices soaring and then crashing during 2008, the arrival of Ali al-Naimi, the dapper Saudi oil minister, seemed undramatic. The small man was smiling after his 20-minute walk from the Grand Hotel, but his serenity was deceptive. Known as ‘Mr OPEC’, or the leader of the Organisation of Petroleum Exporting Countries, al-Naimi had uncharacteristically sought publicity before the 11 members of the price-fixing cartel began their 153rd meeting that morning.

‘We think prices will rise,’ he had puffed during a 6 a.m. run along the Baroque Ringstrasse the previous day. As usual, he was seeking to influence the markets in New York and London. To his satisfaction, over the next 24 hours speculators had bid up oil prices by $1 to $63 a barrel, a 100 per cent increase in eight months. Over the next weeks, al-Naimi hoped, if the speculators could be persuaded, prices would rise by another $20; and then by a further $70 to $150, an all-time high. Billions of dollars had flowed from the Western countries into the oil producers’ coffers in previous years, but al-Naimi was determined to defy economic law. Demand for oil had fallen since the crash in July 2008, record amounts of oil were in storage, and the world had plunged into recession. Yet he was talking up prices. If he was to succeed, he would have to persuade the other OPEC members, an exclusive but quarrelsome club, to endorse his strategy.

Unlike the exotic pageant of presidents and kings who had attended OPEC’s meetings during the 1970s, the 10 ministers and their aides who followed al-Naimi into the shiny office block were colourless placemen. Journalists no longer witnessed dramas like Saddam Hussein embracing his bitter enemy the Shah of Iran in 1975 while the stylish Sheikh Yamani, al-Naimi’s predecessor as the Saudi oil minister, hovered in the background. In those days, the dictators posed as brokers of the world’s future. Having wrested control of their oil from the cabal of dominant Western companies known as the Seven Sisters, the OPEC countries had freed themselves of the imperialist, and occasionally racist, attitudes that had formerly dictated their fates. The American and British corporations, blamed for their wilful blindness about realities in West Africa, Central America and the Arab world, had ceased to be the guardians of the common destiny.

Nevertheless, oil remained the world’s biggest business. Every aspect of mankind’s lives depended on the refinement of crude oil into energy, plastics, chemicals and drugs. For a century the commodity has been on a rollercoaster, swinging from surplus to shortage. Cheap oil has fuelled booms while high prices have plunged the world into recession. Finding a balance has been elusive. Always the target of mistrust, oil has now become a tougher, more unpredictable business than ever before.

In 1975 Anthony Sampson, the redoubtable author of The Seven Sisters, a groundbreaking description of the relationship between the seven major oil companies and OPEC, described the Arab – Israeli war of 1973 as the ‘last battle’ to control the industry. ‘The fascination of oil history,’ he wrote, ‘lies in the ever changing form of the battle to control supply.’ Focused on the ‘collision course’ between the governments of the oil producers, the oil companies and the governments in Washington and London, Sampson, like others, did not anticipate Iraq waging war against neighbouring Iran and Kuwait, or that America would twice lead invasions of Iraq, characterised by some as ‘blood for oil’. He would have been struck, as I was, by the candour of the vice president of one of America’s biggest oil companies whom I asked in passing in 2007, ‘Was George W. Bush’s invasion of Iraq about oil?’ He replied, ‘Absolutely, yes.’ Some argue that the ideological Cold War has been replaced by ‘resource wars’. In Sampson’s era, the ‘resource war’ revolved around disputes about prices between the oil companies and OPEC.

In the two years after the 1973 Arab – Israeli war, the OPEC leaders defied American forecasts that their cartel would collapse, because the consequence of oil prices quadrupling would be a recession in the West. But OPEC’s defiance was rewarded, and despite the nationalisation of many Western-owned oilfields, the unnerved oil companies collaborated with their expropriators. Stripped of their mystique and their arrogance, the American and British giants were transformed into paper tigers. Anxious to guarantee oil supplies and to maintain their share of markets, the companies that had discovered and developed the oilfields and refined the crude became supplicants. To many, OPEC’s ascendancy appeared to be irreversible. Only a few wise oil men mentioned the fact that cycles never changed. Permanently fixing the market was beyond any mortal, even the OPEC nations.

By 1990, OPEC’s lurking threat had indeed diminished. The procession of technocrats following Ali al-Naimi to the second floor of OPEC’s headquarters understood that oil had become democratised: prices were set by traders in New York’s and London’s markets rather than by OPEC’s edict. Yet, even though they were no longer brokering mankind’s destiny, the ministers retained control of 40 per cent of the world’s oil supplies – sufficient to wield considerable influence.

Since oil is the OPEC countries’ principal, and usually only, source of income, the 11 officials who attended that 153rd meeting had every incentive to seek the highest prices. Between the certainty of extracting oil from the Saudi desert for $2 a barrel or risking $100 billion to drill a speculative well four miles below the sea in the Gulf of Mexico, is the insoluble mystery of establishing the true price of a simple product. The conundrum is to identify the dividing line between reasonable businessmen and villains. Since 1990, that division has become obscured.

In that year Daniel Yergin wrote The Prize, a magisterial description of oil’s influence on modern history. Oil, he commented, remains ‘central to … the very nature of civilisation’. But many of the political trends of the previous century which he described were changing. The major oil companies were becoming minnows, and OPEC’s power was being challenged by non-OPEC oil-producing countries, especially Russia and the states around the Caspian Sea.

The moral keynotes were also changing. Historically associated with corruption, civic corrosion and civil war, the relationship between the governments in Washington and London and the oil companies had been a dominant topic for a century. Posing as representatives of mankind’s interests, but beyond mortals’ control, the corporations’ chairmen appeared detached from national governments. Uncertain who was using whom, many debated whether the oil companies should be supported, controlled or investigated. An important theme explored by Yergin and Sampson was the battle waged by America’s federal and state governments against J.D. Rockefeller, the creator of America’s oil industry. The epic legal contests against oil companies had usually ended in the governments’ defeat, spurring public anger about Big Oil. ‘His lack of scruple and his mendacity,’ wrote Sampson of Rockefeller, ‘provoked a continuing distrust of the oil industry.’

Oil provokes irreconcilable emotions. Moralising sermons about oil have never stopped, but since Sampson’s and Yergin’s books, some issues have changed. Destitution in the Niger delta, the contamination of Alaska’s pristine wilderness, the destruction of Canada’s forests and spreading corruption across Africa are all blamed on oil companies. ‘African oil did not create the system or its failings,’ wrote Nicholas Shaxson in Poisoned Wells, accusing Shell, ExxonMobil and the French oil corporation Elf of destroying idyllic communities. Serious authors have claimed that the oil industry is ‘among the least stable of all business sectors’, and that supplies are ‘utterly dependent on corrupt, despotic “petrostates” with uncertain futures’. The riddle is whether, in pursuing their priority of caring for their shareholders and their customers, the oil majors should refrain from interfering in the internal affairs of Third World countries, or accept a duty to prevent the ‘institutionalised pillage’ of impoverished populations and to oversee the fate of their nations’ oil wealth.

These issues continue to be exhaustively debated. Besides the technical and corporate histories, there are many descriptions of evil corporations exploiting the Third World and causing environmental catastrophe. In addition, a new dominant theme has arisen: ‘The End of Oil’. Predictions laced with alarming statistics foreshadow permanent shortages, blackouts and soaring prices. ‘Terminal decline’ is the favoured phrase of those speaking in apocalyptic terms about the world imminently running out of oil. One authoritative tract is Twilight in the Desert (2005) by the investment banker Matthew Simmons, who claims that Saudi Arabia’s oil production is ‘at or very near its peak sustainable volume (if it did not, in fact, peak almost 25 years ago), and is likely to go into decline in the very foreseeable future’. Even Simmons’s critics acknowledge the value of his polemic. If Saudi Arabia’s supply of oil does indeed decline, the world’s destiny is questionable. However, despite Simmons’s insistence that his doom-laden prediction is ‘not a remote fantasy’, Saudi Arabia increased its production capacity from eight million barrels a day in 2005 to 12.5 million in 2009, when the world’s daily consumption was 86 million barrels. In the aftermath of prices crashing in July 2008 and surplus oil sloshing around the world, the prophets of doom disappeared from the television studios and newspapers. Since then, the wailing about the world’s endangered oil supplies has reverted to blaming the oil companies for restricting their investment in the search to find new oil.

Unlike oil’s first century, over the last 20 years no single nation, government, cartel or corporation has controlled its fate. Markets have determined prices and investment; but there has been a twist. Because the oil-producing countries retain up to 90 per cent of the profits, the Western oil companies have the delicate task of persuading what are usually classified as Third World countries to share their wealth and sell access to their reserves. The apparent shift of power to African, Asian and Middle Eastern governments provoked the increasingly fashionable assertion that ‘White people and their companies no longer pull the strings.’ The contention that the former imperialists have been humbled ignores the irrefutable truth that without the ‘white people’s’ technology, organisation and marketing, the oil-producing nations could not prosper. In Africa, Asia and South America, impoverished nations may be ecstatic about the sudden promise of effortless wealth; but it is only realisable with skills invented by Western companies.

In pulling the strands of the oil industry together, this book takes no sides in the arguments among the specialists and partisans. Rather, I have recognised that many of those employed in the oil industry are remarkably intelligent individuals pursuing their ambitions with expertise and inspiration, rather than being inextricably entangled, as the alarmists suggest, in corruption, conspiracies and cover-ups.

United by a smelly, unattractive product, most of the millions of employees who work in the oil industry are strangers to each other. Unlike manufacturing cars or planning a space programme, oil offers no natural bond. The petrol-station attendant, the crews of the supertankers, the offshore engineers, the dedicated geologists, the excitable traders, the sober accountants, the nationalistic politicians, the rig workers in the prairies, deserts and jungles, the refinery workers and the corporate chieftains are all interdependent in their efforts to produce and convert crude oil. Yet there is no bond between them to overcome their separation and rivalry. Oil unites all their destinies, but they are professionally isolated. Since the late 1980s, however, there has been a common thread: some squeeze markets, some squeeze rocks, some squeeze crude oil through refineries, while others squeeze governments and rival corporations. Oil is not a business for fools or the faint-hearted.

To chart for the first time what has occurred over the past 20 years, I have followed the careers of some of the principal personalities who have determined oil’s fate as its price rose from $7 to $147 a barrel. As I interviewed nearly 250 people across the world, I gradually came to understand the perpetual conflict between the oil companies and the nations that control the reserves, the arguments between consumers and the proponents of the end of oil and climate change, the overwhelming influence of the oil traders, the ingenuity of the explorers, the ambitions and frustrations of the chieftains who manage the world’s biggest corporations, and the agendas of politicians anxious to control the world’s lifeblood.

The story of oil over the last two decades is fascinating, but to understand all the disparate elements – the personalities, the corporations, the governments, the traders and the geologists – requires gradual introduction. Unlike the straightforward structure of a standard history or the description of a particular event, this book takes the reader on a journey through the lives and eyes of the major characters who have dominated the industry. As readers become familiar with the labyrinthine complexity of the subject, I hope that, like myself, they will become excited by the discovery of an epic story at the heart of all our lives.

After interviewing nearly 250 key people, I selected a handful to reflect the turbulent era. Over the 20 years, John Browne of BP was undoubtedly the dominant personality in America and Britain. His rival chief executives, including Lee Raymond of Exxon, Phil Watts of Shell and David O’Reilly of Chevron, were similarly robust, but were begrudgingly compelled to follow his course. In a parallel universe are the oil engineers like Dave Rainey, challenging scientific boundaries to discover oil six miles beneath the sea bed. Understanding the technology might seem challenging, but I believe that even laymen will be gripped by the saga. Unknown to the engineers are the oil traders, churning billions of dollars every day in speculation about unpredictable prices. After speaking to dozens of traders and reporters, I chose to follow Andy Hall, an understated multi-millionaire hailed by his generation as a genius. Of all the oil-producing countries, events in Russia became far more interesting than in the OPEC countries. Fortunately, as oil prices rose from $30 a barrel towards $147, I hitched myself to Mikhail Fridman, an oil oligarch in the midst of a fierce battle with BP as President Putin and other politicians, government officials and lifelong experts all sought to influence oil’s fate. Challenging their assumptions and decisions are committed environmentalists. All those personalities and interests found their place in a narrative which makes no attempt to be encyclopaedic, but simply to tell an astonishing story.

This is my eighteenth book, and I have found that a career charting the lives of politicians, tycoons, murderers and charlatans was the perfect background to grappling with the intricacies of the oil industry. Fortunately, I encountered few refusals to my requests for help. Across the world, many key players offered me their insights. What has emerged, I believe, reveals how we are all simultaneously both the victims and the beneficiaries of The Squeeze.

In Vienna in May 2009, Ali al-Naimi was gambling against a squeeze by those speculating that prices would fall. One week after his prediction during his Ringstrasse run, the price of oil had risen from $62 to $68 a barrel. His gamble had been rewarded. Those who had speculated on falling prices had been squeezed by a counter-squeeze, talking up prices. Markets, like the subterranean rocks where oil is found, are unpredictable. Squeezes are often followed by bursts, and there are always casualties. Oil is a uniquely human story.

Tom BowerJuly 2009

ONE The Emperor
NEW YORK, 25 SEPTEMBER 2003

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.