* Exxon CEO Tillerson has long ties to Russia
* He worked closely with Russian oil tsar Sechin
* Sanctions tested Tillerson's relations with Russia
(Recasts, updates throughout)
By Denis Pinchuk and Olesya Astakhova
MOSCOW, Dec 12 Soon after the United States
imposed sanctions on Moscow in 2014, Russian oil tsar Igor
Sechin told a Reuters reporter he would miss three things:
exploring U.S. culture, the chance to show his children American
landscapes, and riding motor-bikes with Exxon Mobil chief
executive Rex Tillerson.
Tillerson is now front-runner to be Secretary of State in
the cabinet of U.S. President-elect Donald Trump, and Russian
officials are relishing the prospect of having someone with
long-standing ties to Russia as the chief U.S. diplomat.
Those same ties -- Tillerson has met Russian President
Vladimir Putin several times and even received a medal from him
-- are causing disquiet among some policymakers in Washington,
who see the relationships as a potential liability.
Few people in Moscow expect that the bitter rifts with
Washington, over Syria, Ukraine, and NATO's presence in eastern
Europe, will be healed overnight with Tillerson at the State
But his emergence as front-runner for the job was seen in
Moscow as confirmation the Trump administration would put aside
old enmity and do deals with the Kremlin.
Trump is expected to name Tillerson, a 64-year-old Texan, as
Secretary of State, a source familiar with the situation said on
Saturday. Tillerson would join other figures with
Russia ties already in the Trump cabinet.
"The choice of Tillerson is a sensation," said Alexei
Pushkov, a pro-Kremlin lawmaker in the upper house of the
Russian parliament. "This is a businessmen, by definition a
pragmatist, who also has lots of experience working with
"Judging by the appointments to the key posts in the
administration, Trump wants to see a decisive and strong
America, but does not see reasons for conflicts with Russia,"
Pushkov wrote on Twitter.
Kremlin spokesman Dmitry Peskov was cautious on Tillerson's
cabinet prospects, saying the appointment had not been
confirmed. But he praised his personal qualities.
"As part of his duties as head of one of the biggest oil
companies, he had contacts with our representatives," Peskov,
said on a conference call with reporters. "He carries out his
duties in a highly professional way."
Asked about how close Tillerson is to Putin, Peskov said:
"They had working meetings. Indeed, the president received Mr.
Tillerson several times."
Though he and Putin know each other, the most important
relationship Tillerson forged in Russia is with Sechin, one of
Putin's closest lieutenants.
Tillerson started coming into regular contact with Russian
officials when, in January 1998, he was made vice president of
an Exxon unit involved in exploration projects in Russia and the
former Soviet Union.
The flagship project was the Sakhalin 1 offshore project in
the Pacific Ocean. Exxon was the operator and Rosneft, the
Russian state oil giant headed by Sechin, was a major
"He knows this whole sphere excellently," said an oil
executive close to Rosneft and Exxon, who spoke on condition of
anonymity. "He was involved in the negotiations and the
implementation of Sakhalin 1.. From the start. And he knows the
peculiarities of the Russian mind-set very well."
In 2012, Rosneft and Exxon deepened their cooperation,
signing an agreement on joint development of oil fields in
Western Siberia. Putin, Tillerson and Sechin came together for
the signing ceremony.
Later the same year Zeljko Runje, who until then had been
vice president of Exxon's Russian operations, moved to Rosneft
to take up the post of vice president and member of the
Their next big joint project was launched in June 2013, when
they set up a joint venture to explore for oil in the Kara Sea,
in the Arctic, and in the Black Sea. Sechin and Tillerson both
attended the signing ceremony.
In the same month, Putin awarded Tillerson the Order of
Friendship, a Russian state honour. The citation said it was for
his "significant contribution to strengthening cooperation in
the energy sector."
Then the Ukraine conflict intervened in 2014, testing
Tillerson's relations with his Russian partners.
After Russia annexed Ukraine's Crimea region and backed
separatist rebels in eastern Ukraine, the United States started
several rounds of sanctions.
Tillerson, like other U.S. energy CEOs under pressure from
the White House, stayed away from an annual investors' meeting
with Putin in St Petersburg in June. He sent a senior Exxon
executive in his place.
By August 2014, Exxon was poised to start drilling on the
Kara Sea's Universitetskaya exploratory well but an imminent
fresh round of sanctions could have halted work.
According to two offshore drilling sources familiar with the
Kara Sea project, Tillerson and his team went into crisis mode.
They managed to sign the contract to supply a drilling rig just
before one round of sanctions was imposed, giving them some
legal breathing space.
The Exxon managers then pushed through the drilling
programme in two months before a further round of sanctions
eventually knocked it off course, the sources said. They found
large reserves of crude.
An Exxon representative was not immediately available for
Soon after, obstacles arising from the sanctions forced
Exxon to suspend its cooperation with Rosneft in the Kara Sea.
The project has since been idling. But Exxon's Russian partners
remember its effort to get the well drilled.
"I think his appointment is favourable for Russia," one of
the two sources said about Tillerson being lined up for
Secretary of State.
(Additional reporting by Maria Tsvetkova in MOSCOW and Ernest
Scheyder in HOUSTON; Writing by Christian Lowe; Editing by