Special Ventures

The world looked on in some amazement in 1991 as the former monolith, the Soviet Union, began to come apart. The process had started when Gorbachev, the Premier of the USSR, had tried to liberalize the economy. Lithuania promptly declared itself independent in 1990.

Yeltsin atop a tank Then in August 1991, the Communists who disagreed with Gorbachev mounted a coup in Moscow, which was put down peacefully after three days of uncertainty….. ……by a group led by Boris Yeltsin (in brown suit atop a tank).

Yeltsin had been elected first president of Russia in June 1991.

In August, in the aftermath of this attempted putsch, Ukraine and Belarus declared their independence, to be followed in September by Latvia and Estonia. Thereafter, in December 1991, the USSR was dissolved.

Somebody in the higher echelons of Mobil must have reacted rapidly to these extraordinary events because in mid-1991 I was called into the Chairman’s office and was asked to do a new job, one without antecedents. It was given the name “The Special Ventures Group” and was to be tasked with finding new business opportunities in any country where Mobil was not present. The job would report directly to the Chairman and would now have me designated as a Corporate VP (as distinct from a division one, previously), one of only four or five in the company. In essence I was handed a blank sheet of paper and told to get on with it. I would have no guidance and no precedent to follow. I was truly on my own.

The good news was that this time, changing jobs did not mean changing countries or even houses! Over the next few weeks I collected some skilled people from around the organization to help form the core of my new group, sorted out office spaces, and set a tentative plan for how to get started on this search for a needle in a haystack.

Initially I looked south and paid visits to Mexico City and to Caracas, Venezuela. Both of these countries had long histories in the oil business and always seemed to be just on the verge of opening up their economies to American investment in their industries, or so many Americans thought. After making a couple of trips to each capital and getting to know key figures in the industry, I recognized that participating in oil developments there was unlikely. And so I looked east.

In 1991 Gorbachev was trying to make the transition from the USSR’s centrally planned economy to something resembling the free market economies of the West. As such, some Western companies had set up in Moscow seeking business opportunities.

To an extent, it came to resemble the Wild East. I quickly set up an office, appointed a resident Country Manager and hired some Russians as translators, interpreters and drivers. At this stage in mid-1991 the country was still Communist and the people were dirt poor. Offices were available in beautiful old Tsarist buildings. Most things were rationed and queues for the meagre foodstuffs in the shops were commonplace.

I still have vivid memories of the street scenes in Moscow in 1991; the shabby clothes of all the people, the shoes that seemed to be made of cardboard and the disgusted looks of the people who saw how we westerners were dressed. There were no neon signs, in fact there were essentially no signs and no goods in shop windows. And the people all looked beaten down and haggard. One of the saddest sights was the women selling puppies at the entrances to the Metro.

It is not possible to overemphasize how miserable a place Russia was at that time. No shop windows, no supermarkets, no cars apart from a few worn-out Ladas, and shortages of all sorts of items. In a couple of the better hotels (all Soviet at this stage), it was easy to pick out the Mafia members who had the money to buy their vodka. And speaking of money, it very quickly became commonplace for only US dollars to be accepted as currency. All in all it was a completely unfamiliar, unprecedented experience.

The initial couple of visits by me to any new country followed a similar routine. It might properly be called “scouting”. You’re trying to find the lay of the land, what the opportunities might be, who the competition was and who could be helpful. On my first visit I went to the U.S. Embassy in Moscow to meet the Ambassador. He was very informative but his main guidance to me went as follows: “Young man, what do you know about corruption?” I told him I had navigated the politics in Nigeria which were very corrupt. “Huh, the Russians are far, far more corrupt. Mind yourself!” I met with the heads of the other western oil companies in Moscow and with the members of the Duma, the Russian parliament, who had influence over the oil business, to make them aware of Mobil’s capabilities.

I also visited the Minister for Oil & Gas to introduce Mobil and to see what the priorities of the government might be. The answer turned out to be more like scientific research rather than commercial investment opportunities, so that wasn’t too helpful.

However, while I was waiting in an outer office, his aide made a sketch which he gave me on the way out! A nice gesture.

Despite its broader remit my Ventures Group was fully focused on Russia and the states of the FSU (former Soviet Union) from mid-’91, to mid-’93. Russia was the world’s biggest oil producer and so seemed to offer significant opportunities, while Chevron had found its way into a giant oil field in Kazakhstan.

We bid at auction for a number of developments in West Siberia fortunately coming second in all of them.The winners turned out over time to lose a lot of money in one case and in another they ended up with the Yeltsin family as disguised, non-paying, significant partners. Finally, we did win a sizable offshore exploration block in the Russian Far East, off Sakhalin Island.

When I reported this success to the Chairman, he, coming from the Marketing side of the business, said we could only take it if we had a partner. In many ways he was risk averse. I called around all the oil companies but only one would come into the effort…Texaco, and they were overjoyed to get an opportunity to partner with Mobil. This of course would prove personally important later on!

An early trip of some significance was a tour of the geological centers in Kazakhstan. We had the Mobil aircraft, and the pilots carried a big bag of US dollars. This was the only way we could refuel the aircraft in the provinces. At each place we landed, looking for significant investment opportunities, we were met by the chief geologist and by the remaining Communist boss.

Evidently, things in the provinces would change only slowly. We would look at their technical data, eat some horrible meals (mostly dried fish followed by horse meat specialty) all washed down with copious vodka toasts to enduring friendship. On one of the visits I was presented with a gorgeous pink ensemble (robe and hat) which the Kazakh horsemen traditionally rode in.

The overnight accommodation usually ranged from bad to awful, with one exception which was the “sanatorium” in Alma-Ata, then the capital of Kazakhstan, for the leaders of the Kazakh communist party. This place came with its own extensive bomb shelters. One of the benefits of these trips was the contacts I made which proved invaluable later.

Also on one of the early trips to the Stans I decided that we should not be in this part of central Asia without going to Samarkand! The Mobil pilots were agreeable, the bag of dollars had plenty left so that’s what we did!

We flew from Almaty, the capital of Kazakhstan at that time to Tashkent in Uzbekistan. Samarkand was just a few hours drive away.

Samarkand had the most amazing cityscape of highly decorated mosques and tombs I have ever seen. The structures were absolutely extraordinary and stunning.

Samarkand Samarkand’s primary claim to fame is due to its being the burial place of Tamurlane (Timur The Lame) and his family. His rule peaked around 1400 CE and his armies were feared throughout Asia, Africa and Europe, sizable parts of which he laid waste.

On our way back to the plane in Tashkent we passed roadside veggie markets. The Russians we had with us from Moscow bought produce and bread, none of which were available in Moscow.

I was very fortunate to have had the opportunity to spend a lot of time in a privileged position witnessing the truly revolutionary changes from Communism in Russia. It was unforgettable. We brought some of the first Russian oilmen from Siberia to visit the US to negotiate with us. (They tore the mini-bars from the walls of their hotel rooms in Washington and took them away with them.) We hosted the Russian ambassador to the US at an outdoor musical performance in a DC suburb. We saw lots of rare icons being taken out of the country by westerners when the Moscow airport administration collapsed. And a lot of antique samovars went the same way!

You can see that for me this period was filled with activity, adventure and new experiences. But it didn’t lead to any new business for Mobil, so in mid-1993 I moved back to my “home” in E&P, taking the Russia/FSU business and my small organization with me.