UpstreamOnline: ExxonMobil gets velvet glove for its iron fist

EXTRACT: With arguably his chief rival Browne trying to save his legacy by sorting out problems in Alaska, Texas and the Gulf of Mexico, and Shell still somewhat shaky after its after its reserves fiasco of 2004, the way is clear for Tillerson to put ExxonMobil out of sight as industry leader. You suspect he knows that and has every intention of trying to do it.

THE ARTICLE

8 September 2006

How the wheel of life turns. It was not so long ago that BP chief executive John Browne was held up as the model of a new liberal and savvy industrialist effortlessly moving his company forward to greater and greater successes.

By contrast ExxonMobil, under the leadership of gruff Lee Raymond, was seen as something of a dinosaur.

Yes, he pleased shareholders with strong financial performances, but he refused to bow to Wall Street demands for more investment and dimissed political criticism of petrol prices.

More seriously, Raymond seemed to care little what the wider public thought and was out of kilter on vital issues such as the environment.

Now BP is in a state of upheaval over who will take over from Browne when he retires and the company seems stuck in a quagmire of accidents, safety problems and litigation.
Meanwhile, ExxonMobil has performed a seemless transition from one chief executive to another, with new incumbent Rex Tillerson appearing to combine the commercial drive of his predecessor with the diplomatic skills of, well… John Browne.

Nine months into the job, Tillerson has managed to keep the profit bandwagon rolling and has put himself out with a small series of carefully chosen interviews with the general media, clearly designed to show a softer public image.

He denies there is any U-turn on global warming, insisting the company position remains unchanged. “Climate change is a serious issue… what we know is that carbon emissions are one of the factors that contribute to climate change.”

ExxonMobil’s communication staff always insisted that the supermajor was unfairly characterised as being in denial on climate change, it was just that Raymond seemed damned if he was going to bother trying to put the record straight.

Tillerson is happy to do this but makes it clear that he has no time for the Kyoto protocol on reducing carbon output, on the grounds that it excludes a large part of the developing world that will be responsible for a great proportion of greenhouse gas emissions in the future.

“People may sleep better at night in Europe because they are signed on to Kyoto. When our children and grandchildren deal with this 100 years from now and it hasn’t made any difference, I’m not sure we’ve done anything for them,” he said.

That sounds rather like Raymond speaking, so maybe we should just expect more of the iron fist from ExxonMobil, only dressed up in a velvet giove.
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Tillerson might have charm, but he is still classic US oilman material. He earned a degree in civil engineering at the University of Texas before joining Exxon as a production engineer in 1975, moving up through the ranks and becoming head of production before being made president in 2004 —: a clear marker that he had been chosen to takeover from Raymond.

When he did finally take the reins at the start of this year he inherited the largest publicly-quoted oil and gas company in peak condition with $8.5 billion of debt but $34 billion in cash.

His key task will be to continue to find reserves in a world in which opportunities are limited and reserves often lie in tough terrains owned by unstable countries.

Winning access to that acreage will come from technological excellence, mighty financial reserves and clever diplomatic skills and Tillerson appears to have all those tools and skill sets in his locker.

With arguably his chief rival Browne trying to save his legacy by sorting out problems in Alaska, Texas and the Gulf of Mexico, and Shell still somewhat shaky after its after its reserves fiasco of 2004, the way is clear for Tillerson to put ExxonMobil out of sight as industry leader. You suspect he knows that and has every intention of trying to do it.

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