Rex Tillerson's four decades at Exxon Mobil could hamper his role as America's top diplomat

As chief executive officer of Exxon Mobil Corp., Rex Tillerson has led a vast energy juggernaut, roaming the globe in search of multibillion-dollar deals, working with despots as well as democrats.

The brash Texas oilman has helped forge or supervise exploration, production and refinery projects in 50 countries on six continents, from Africa to the Arctic. The company was widely seen as a quasi-state, with more influence in some parts of the world than the U.S. government.

If Tillerson is confirmed as Donald Trump’s secretary of State, however, he may find that his 41-year career at the world’s largest publicly traded oil and gas company could hamper his ability to freely conduct foreign policy as America’s top diplomat.

A Senate confirmation fight already is brewing over Tillerson’s personal and business ties to Vladimir Putin, now Russia’s autocratic president. Few in Congress feel warmly about Putin, and many are outraged that CIA reports show that Russia used hackers to try to influence the U.S. presidential race.

After several days of leaks from his transition team, Trump confirmed Tuesday that he will nominate Tillerson, saying the 64-year-old oil mogul’s career “is the embodiment of the American dream.”

"His tenacity, broad experience and deep understanding of geopolitics make him an excellent choice for secretary of State,” the president-elect said in a statement.

To avoid direct conflicts of interest, Tillerson would be required to sell his $240 million in Exxon Mobil stock and other holdings. But he might also have to recuse himself from specific issues before the State Department, experts say.

“Unless he severs all financial ties to Exxon Mobil, he will be required by law to recuse himself from everything relating not just to that business, but from all industries in which it operates — something that would make it very hard for him to do his job,” Norman Eisen and Richard Painter, who head Citizens for Responsibility and Ethics in Washington, an ethics watchdog group, said Tuesday in a statement.

“It may be that the appearance of conflict and the need for repeated recusals is so profound that the Senate concludes he cannot do the job,” said Eisen, who served in the Obama administration, and Painter, who worked for President George W. Bush.

Tillerson’s Senate confirmation is far from assured. Democratic opposition appeared strong and some Republican lawmakers have expressed concerns about his work in Russia, although none have yet said they will vote against him.

Sen. John McCain (R-Ariz.) said he would ask Tillerson if he ever voiced criticism to Putin for his egregious human rights record at home and abroad, including recent Russian air attacks that killed civilians in Syria.

“I have concerns about what kind of business we do with a butcher, a murderer and a thug, which is exactly what Vladimir Putin is,” McCain said.

As Exxon Mobil’s CEO, Tillerson opposed the 2014 decision by the Obama administration and its European allies to impose sanctions on Russia for its seizure of Crimea from Ukraine, a dispute that sent U.S.-Russian relations into free fall.

The sanctions cost Exxon Mobil about $1 billion, according to company reports, because projects had to be scrapped.

In 2011, Exxon Mobil had signed a deal with Russia’s largest state-owned oil company, Rosneft, for joint exploration and production in hard-to-reach territory north of the Arctic Circle, where more than 90 billion barrels is believed to be in reserve.

Today, that project looks foolhardy, said Pavel Molchanov, an oil industry analyst with Raymond James & Associates.

“At today’s oil prices, there’s absolutely no rationale for Arctic oil drilling,” Molchanov said. “It’s in a remote location, difficult climate. It’s pretty marginal, economically speaking. There obviously are places to drill with today’s prices. The Arctic is not one of them.”

Rosneft was built on the ruins of Yukos, an oil company that belonged to Russian tycoon Mikhail Khodorkovsky, who was sent to prison for alleged fraud in what many saw as a case of Putin’s revenge for the businessman’s support of anti-Kremlin forces. 

Rosneft and its CEO, Igor Sechin, who is considered Putin’s right-hand man and someone with whom Tillerson worked closely, were specifically blacklisted by the Western sanctions.

In 2012, two years before the Ukraine invasion, Putin bestowed Russia's Order of Friendship on Tillerson, a rare prize for a U.S. citizen and one that on occasion has been given to communist spies.

The Tillerson “appointment is very beneficial for Putin,” said Vladimir Milov, Russia’s former deputy energy minister and an opposition leader. “It will mean the end of values of the American foreign policy vector and a transfer to purely pragmatic deals on certain matters."

On Tuesday, Russia was the first country to praise Tillerson, saying he exhibited a “pragmatism” that would permit “a mutually beneficial relationship” between Moscow and Washington.

Other plaudits came from parts of the Middle East, where Tillerson is well known among Persian Gulf royalty.

Some Sunni Arab leaders felt neglected by an Obama administration that focused on forging a nuclear pact with Shiite Iran, archrival of Saudi Arabia, and called for a strategic pivot to Asia.

In Saudi Arabia, Exxon Mobil has multibillion-dollar investments in refineries and chemical companies with Aramco, the Saudi oil conglomerate founded by Exxon and considered the world’s most valuable company, worth an estimated $10 trillion.

In Qatar, Exxon Mobil is part owner of 12 of 14 liquefied natural gas plants, and in the United Arab Emirates, Exxon owns nearly a third of the largest oil concession there, according to the Middle East Institute, a think tank in Washington.

“Arab leaders in the Gulf might look favorably on the appointment of a familiar oil executive as secretary of State,” said Jean-Francois Seznec, a scholar at the institute. “However, they also know he is quite a strategist who knows the regional games and how to play them.”

John Kirby, a State Department spokesman, would not venture an opinion on what Tillerson should do to remove the appearance of conflict of interest.

He said the current secretary of State, John F. Kerry, and his wife agreed to divest a specific amount of assets within 90 days of Kerry’s confirmation. 

The last business leader of Tillerson’s level to serve as secretary of State was George P. Shultz, chosen for the post by Ronald Reagan in 1982. Shultz headed Bechtel Corp., a San Franciso-based construction and civil engineering behemoth with projects around the world.

Shultz signed a pledge not to participate in any decision that would affect Bechtel operations and divested himself of most investments in Bechtel, placing the proceeds in a blind trust.

Tillerson also is expected to face sharp questioning over his views on climate change, clean energy and the Paris agreement to slow global warming. Environmentalists and consumer advocates said they fear Tillerson will help lead policy away from curbing emissions to broader use of fossil fuels.

“Rex Tillerson would put the U.S. oil industry at the forefront of U.S. foreign policy at a time when it is facing extinction because there’s a global consciousness about climate change,” said Jamie Court, executive director of the advocacy group Consumer Watchdog.

Tom Steyer, the billionaire clean-energy advocate from California, called Trump’s pick “just a punch in the face to the rest of the world. [It says] we have no intention to do anything to move America forward in clean energy.”

Michael Brune, executive director of the Sierra Club, said Trump’s Cabinet contains “a who’s who of climate deniers and fossil fuel hacks, so we’re shocked but not surprised that he chose the head of one of the world’s largest and most environmentally disastrous oil companies to be his ambassador to the world.”

Publicly available information about Tillerson’s assets shows virtually all his investments are in Exxon Mobil or its affiliates.

He was paid $27.3 million in compensation in 2015. His pension was valued at $69.6 million and, according to data from FactSet, he owns about $240 million in company stock.

Wilkinson reported from Washington and Penn from Los Angeles. Staff writer Jim Puzzanghera in Washington and special correspondent Mansur Mirovalev in Moscow contributed to this report.

tracy.wilkinson@latimes.com

ivan.penn@latimes.com

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