Kitabı oku: «The Squeeze: Oil, Money and Greed in the 21st Century», sayfa 2
Khodorkovsky’s ambition to topple Vladimir Putin was undisguised. During his conversations with Raymond in Moscow in early 2003, he anticipated his supporters winning 40 per cent of the seats in the Duma, the Russian parliament, and himself becoming prime minister after the elections in December that year. By June 2003 he was assumed to have bribed sufficient members of the Duma, including some of Putin’s supporters, to defeat the government’s legislation on tax reform. If the legislation became law, Khodorkovsky was heard to predict, Putin would ‘get fired’. Putin’s irritation had not troubled Khodorkovsky, and relations between the two had deteriorated as the oligarch flaunted his ability to bribe members of the Duma in the months before the elections. Russia’s internal strife did not concern Exxon’s chairman, although he knew that the Kremlin was the only obstacle to a deal. ‘I’ll look after the government,’ Khodorkovsky had reassured Raymond. ‘Don’t rely on that,’ Raymond was advised. ‘We need our own approach.’ Other than Putin himself, only three other people could decide Yukos’s fate, and those power-brokers, everyone assumed, were not sure themselves what would happen next. Igor Sechin was among those who could provide reassurance.
Igor Sechin was Putin’s trusted ‘Mr Oil’ in the Kremlin, the gatekeeper to Russia’s oil policy. The two had become friends while working together for the mayor of St Petersburg, Anatoly Sobchak, during the Yeltsin era. Sechin was also chairman of Rosneft, a state-owned oil company. A key member of the ‘siloviki’, the St Petersburg crowd of hard-faced former KGB and military officers surrounding Putin in the Kremlin, 43-year-old Sechin was regarded by outsiders as disdainful of the Jewish oligarchs who controlled about 50 per cent of Russia’s economy. Convinced that Sechin would oppose a deal between Yukos and Exxon, Exxon’s representatives in Moscow had sought an alternative route through the Kremlin’s hierarchy to secure Putin’s approval. Igor Shuvalov, Putin’s economic adviser, was chosen as the conduit. Based at Old Square, the former Communist Party headquarters linked to the Kremlin by an 800-yard tunnel, Shuvalov had heard about Exxon’s ‘equity investment’ in Yukos soon after Khodorkovsky initially approached Tillerson. Since the size of Exxon’s proposed stake was deliberately concealed, he had no reason to object. ‘I will inform the boss and get back to you,’ he had said. One week later, Shuvalov telephoned Exxon’s office: ‘This is interesting. We are supportive.’
Since then, greed had infected the negotiations. As Exxon’s experts grasped Yukos’s true value, caution was abandoned. A desire for a 20 per cent stake was replaced by wanting everything. ‘We hunt for whales, not sardines,’ said Raymond. ‘We won’t be a junior partner in Russia. We’ll only invest in Russia when the terms are right.’ Khodorkovsky also became greedy. Aware that the oil majors needed new reserves and were envious of BP’s deal, he wanted top dollar for his shares. The timing, he said, was perfect. The rouble had devalued, and Yukos was aggressively valued. At $35 a barrel, oil prices, he believed, were peaking. Like every oil executive, he could not imagine where oil prices were heading over the following five years.
In June 2003, Khodorkovsky anticipated success. To celebrate Yukos’s record profits, he rented a luxury yacht to sail from Moscow to St Petersburg. Four days later, his business partner Platon Lebedev was arrested and charged with fraud. ‘Don’t worry,’ Khodorkovsky told his entourage. ‘He’ll be in jail for three months and then we’ll get him out.’ No one was quite sure whether Khodorkovsky genuinely believed his own bravado, but he refused to flee Russia. ‘I’m not going to become the next insane Berezovsky,’ he said, referring to the oligarch who, after helping Putin to power, fled as a permanent exile to London. In the event Lebedev was found guilty of tax evasion and sentenced to eight years’ imprisonment.
Raymond remained oblivious to the changing mood. Unlike John Browne, he was unversed in Russian culture and sensitivities. While Browne respected Russian history, Raymond saw a greenfield site. Exxon lacked experts who could provide genuine insight about the Kremlin’s intentions, especially Putin’s ambition to use the world’s dependence on Russia’s energy resources as a tool to reassert the nation’s status as a superpower. Whether Putin regarded Khodorkovsky as a serious obstacle to that ambition in summer 2003 is uncertain. Raymond did not suffer any misgivings. Impervious to subtleties, he approached the final deal, as always, by squeezing sentiment out of the negotiations. In July 2003 he visited Putin in the Kremlin. His pitch to the president was familiar: ‘We can help you elevate your country by extracting your oil resources.’ During that visit Mikhail Kasyanov, the prime minister, assured Raymond that Exxon would be allowed to buy a stake in Yukos.
Raymond, accustomed to negotiating with kings and presidents as an equal, shared their lifestyle. Arriving in Moscow with six bodyguards, he secured motorbike outriders from Moscow’s police department for his limousine’s dash into the city, and the whole top floor of the Kempinsky, Moscow’s most expensive hotel, was assigned to him. Putin would be intrigued to hear about two eccentricities during that visit. Since Raymond intended to leave Moscow on a Sunday, the city’s Baptist church was opened on Saturday to allow him and his wife Charlene the chance to pray.
During a previous visit to Moscow, Charlene had spotted some sculptured wooden figures in a store which she wanted to inspect again. Exxon’s security officers had declared that revisiting the store was excessively dangerous, so arrangements were made just prior to the Raymonds’ arrival for a room on the Kempinsky’s top floor to be converted into a display and filled with 60 wooden sculptures. After nearly two hours in the room, Charlene announced, ‘Yes, I’ll take them.’
Exactly 30 minutes late, Putin entered the Waldorf suite, accompanied by Igor Shuvalov, Sergei Priodka, a foreign affairs adviser, and the Russian ambassador in Washington. Putin would have been conscious that he was nearly the youngest in the room. He and Raymond shared a three-seater divan, while Rex Tillerson and Anna Kunanyansay, Exxon’s Russian-speaking adviser, took chairs. Kunanyansay, a Jewish émigrée from Kiev, had made the arrangements with the Russian ambassador for the meeting. Trusted by Lee and Charlene Raymond, she was suspicious of Putin.
After a few minutes’ pleasantries, Raymond cut to the chase. His tone was deferential, but not obsequious. ‘As you know, Mr President, we have been in negotiations for some time with Yukos.’
‘Yes, I know,’ said Putin. ‘For 25 per cent of the shares plus one share. A minority stake.’
‘Well, Mr President,’ replied Raymond, ‘I think we must be clear. I want you to understand that we will only buy 25 per cent if we can see a way to buy total control, and that’s why I’m here to see you today. To check that that’s OK with you. Our ultimate goal is to buy a majority stake in Yukos.’
Putin did not flinch visibly, but the translators heard exasperation in his reply, ‘This is the first time I’ve heard that. Khodorkovsky didn’t tell me.’ Raymond pursued his theme, explaining that the deal would improve Russia’s relations with America. ‘Well, we’ll see,’ said Putin evasively. ‘These details are for my ministers. You must deal with them.’ Raymond was not discouraged. Putin’s impatience was lost in the translation, and he had not actually rejected the idea of a deal. Raymond failed to spot the significance of Putin repeating three times: ‘This is the first time I heard about this. Khodorkovsky never told me about this.’
On 26 September, after meeting leaders of the American business community including Raymond at the New York stock exchange, Putin flew to see President Bush at Camp David. While he was there he mentioned Exxon’s bid for Yukos, and found to his surprise that Bush was unaware of the deal. Putin did not know that ever since Standard Oil was dismantled by the US government in 1911, American oil men had been indoctrinated not to confide unnecessarily in government officials, including the president. Inevitably, the rule was broken whenever Exxon needed Washington’s help. After all, despite the corporation’s culture of distrusting governments, America was at the centre of its universe.
Five days later, Raymond arrived in Moscow to participate in a meeting of the World Economic Forum starting on 2 October. He was to share a platform with Khodorkovsky. Putin and Roman Abramovich, the oligarch and co-owner of Sibneft, would be in the audience. Before Raymond left Dallas, Khodorkovsky’s demand for $50 billion for his shares had been considered. Raymond, the master of the hard bargain, declared that he would offer $45 billion. The Exxon team flying to Moscow were confident that the deal would be finalised and announced during the conference. Publicists were drafting the announcement.
On the top floor of the Kempinsky, Raymond waited for Khodorkovsky to haggle over the $5 billion. Khodorkovsky had heard a garbled report of the meeting between Raymond and Putin in New York, which was described as ‘the final nail in the coffin for Khodorkovsky’s relationship with the Kremlin’, and ‘the beginning of the end’. Khodorkovsky showed no concern, even after Yuri Golubev, the chain-smoking, heavy-drinking cofounder of Yukos, heard from a Kremlin official that ‘the meeting in New York was bad’. Raymond was regarded as having been excessively blatant, and Golubev heard that Putin felt misled by Khodorkovsky, and annoyed at being placed in an ‘uncomfortable position’ by Raymond’s ‘inappropriate behaviour’. Self-interestedly, Golubev did not mention to Khodorkovsky Putin’s anger at the oligarch’s failure to mention Raymond’s true ambition.
In reality, the situation was worse than Golubev imagined. On his return to Moscow Putin had summoned a meeting. Poring over an ‘oil map’ stretched across a conference table, his experts identified the existing foreign ownership of Russia’s oilfields. BP’s recent deal with TNK and Exxon’s prospective purchase of Yukos and Sibneft would place half of the Siberian oilfields under Western control. Oil and gas made up 40 per cent of Russia’s exports. Putin became agitated, and rejected the arguments of the modernisers in his government that Western oil majors were more efficient than Russian producers, and their claim that Russia would retain all the profits through taxation. Suspicious that Exxon was conspiring to threaten Russia’s national interest, Putin reflected the familiar mixture of Russian attitudes towards the West – simultaneously craving respect while suffering an inferiority complex. The notion of Russia’s oil being under Western control sparked his insecurity, envy and resentment. His grievances were echoed by the ‘Grey Cardinals’, his xenophobic ex-KGB cronies. Like their predecessors employed by Yeltsin, they lusted for personal wealth. Allowing ExxonMobil to move further into Russia threatened their ambitions, which were already limited by BP’s deal. By September, Putin was becoming convinced that Khodorkovsky had planned for two years to fund his takeover of Russia by selling Yukos. The president feared that Khodorkovsky could even buy the prosecutor general, or at least organise his dismissal. The resurgence of Putin’s national conscience had been anticipated by a handful of realists in Yukos’s hierarchy: ‘It’s all crazy to think Putin will allow a crown jewel to be sold to foreigners to benefit a group of Jewish bandits.’ But Khodorkovsky, they agreed, was ‘running high’. The turbulence influenced Khodorkovsky’s negotiations with Raymond.
Khodorkovsky arrived at the Kempinsky with his trusted translator Peter Laing. Over two hours he argued with Raymond about the $5 billion. Reams of paper were covered with figures as the translators interpreted the sums. ‘Ego’, one of the translators would say, was preventing the two men splitting the difference. ‘They’re chiselling,’ he concluded. Unwilling to concede, Raymond stormed out of the room and slammed the door of his bedroom without saying goodnight. In hindsight, he would conclude that Khodorkovsky was double-dealing, dangling an alternative deal to Chevron. ‘The meeting did not go well,’ Khodorkovsky told his staff after returning from the hotel. ‘We won’t be able to do the deal with Exxon the way they want, but let’s keep them involved to keep the pressure on Chevron.’ By then, Khodorkovsky’s fate had been sealed.
In that familiar territory, few were surprised by the news on Saturday, 25 October. Late that night Mikhail Khodorkovsky’s private plane was ‘delayed’ on the tarmac in Novosibirsk, Siberia. Suddenly, a group of masked security officers burst into the plane, shouting ‘Weapons on the floor or we’ll shoot!’ Khodorkovsky was arrested on charges of fraud and tax evasion. His arrest prompted his close associates to flee to Israel and the USA. ‘This is the signal that politics has trumped even the appearance of rule of law,’ said Robert Amsterdam, Khodorkovsky’s American lawyer. But Khodorkovsky’s arrest was popular in Russia, except among the other oligarchs, many of whom fled overseas in their private jets to watch events unfold in safety. Mikhail Fridman arrived in Mexico that night on a private jet, for a planned holiday with friends.
Rex Tillerson shed no tears. He shared Khodorkovsky’s contempt for the swamp of corruption among ministers with no interest in the country; but he also had no sympathy for the oligarchs. Raymond was upset that his conversation with Putin in New York may have caused Khodorkovsky’s arrest, not least because the Kremlin began pursuing Russians employed by Yukos, causing several to flee to the West. But he expressed no concern that the meeting had contributed to triggering the oil industry’s renationalisation, changing the atmosphere for Western business in Russia. ‘If they don’t understand, then they’ll have to learn,’ Raymond told an aide. ‘We won’t be a junior partner in Russia. We’ll only invest when the terms are right.’
In December, Tillerson acknowledged the deal was dead. Yukos was under investigation for tax evasion and Khodorkovsky was charged with serious offences. ‘Russia is closed,’ announced an Exxon executive. ‘It’s impossible to put the genie back in the bottle.’ Western shareholders were about to lose billions of dollars. Putin had done more than terminate a deal; he had curtailed the immediate modernisation of Russia’s oil industry with Western technology and the chance to balance OPEC’s power. Ten years after President Clinton exploited America’s Cold War victory to prise the oil reserves around the Caspian Sea from Russian influence, Putin had begun to reverse the humiliation. Russia’s prestige and power, he decided, depended upon high energy prices or, more potently, refusing to commit his government to satisfying all Europe’s energy requirements. Security of supply rather than the price of Russia’s oil and gas would determine the fate of the world’s economy. Satisfying the increasing global demand for oil partly depended on increasing Russia’s oil production from 10 million barrels a day to 12 million. That increase hinged on Khodorkovsky’s modernisation of Yukos. After Khodorkovsky’s arrest, Yukos’s self-improvement programme gradually withered, Russia’s oil production slipped and China’s growing demand could not be satisfied. Unforeseen, the débâcle contributed to the oil crisis in 2008 and the global recession.
By then Raymond had retired with a record $398 million payoff and pension. Looking back on his Russian experience, he could draw on the Exxon homily that there was nothing new in oil – only the players in each country were different. In the balance of risk, he had won some and lost some, but the cycle had never changed. Exxon was in better shape than it had been when he had taken over. In his Exxoncentric manner he ignored the problems he had created. The mergers and consolidation among the oil majors orchestrated by himself and John Browne had created a new arrogance and blindness towards the oil-producing countries, alienating their governments from granting the oil majors access to their reserves. Putin’s reaction against Exxon was echoed by governments across the globe. In unison, they regarded Exxon, BP and Shell as selfishly unwilling to share their profits. More pertinently, Raymond and Browne, while worshipping the cycle, had misjudged their scripture.
Both had inherited similar lessons about limiting risk. Their forefathers, they had been taught, had been scorched during the 1960s by investing too much. By the late 1970s the industry was hampered by bottlenecks. Mastering the cycle, Raymond and Browne knew, was perilous, just as predicting oil prices was impossible. Their predecessors had failed to foresee the collapse of oil prices in 1986, 1993 and 1998, and none had anticipated the huge increases after 1973. Learning the lessons had proved difficult. In 2003, Raymond and Browne did not anticipate that the cycle had again turned and prices would rise. More eager to instantly satisfy their shareholders than to care for the long-term security of oil supplies for Europe and the United States, both were buying back shares rather than investing in new oilfields. They would blame oil nationalism for preventing efficient exploration and production, but Raymond’s insensitivity towards Putin justified the president’s suspicion.
TWO The Explorer
Gathering the masters of the underworld at BP’s concrete campus in Houston’s sprawling suburbs in early 2009 was a cruel ritual. The muted light cast a harsh sheen across the weary faces of 12 men and one woman in the ‘Big Brain Room’, a small cinema formally known as the HIVE, the Highly Immersive Visualization Environment. In the centre of the front row sat David Rainey, BP’s head of exploration. Peering at the curved screen through battery-powered spectacles allowing ‘sight’ of the whole reservoir, the audience scrutinised the computer-generated three-dimensional images of a possible oil reservoir four miles below the waves of the Gulf of Mexico. Hand-picked to assess the risks, none of the 13 was a buccaneer; they were rather proven company loyalists temporarily united by one credo: if their $100-million gamble to discover whether oil existed deep in the unknown was successful, BP could pocket $50 billion over ten years. But they would be cursed, not least by themselves, if their calculations were wrong. For oil explorers, the licence to make mistakes was limited. The humiliation of failure was permanent.
The mood in the HIVE was inevitably influenced by BP’s decision to locate its headquarters within a modern concrete zone. Despite some scattered trees, the disfigured Texan landscape embodied the cliché that oil is either an old, difficult and dirty business or ‘new, good stuff’.
‘Nothing is more exciting than drilling,’ smiled Rainey. The Ulsterman, born in 1954, personified the oil man’s permanent restlessness. Easy oil – ‘the low-hanging fruit’ – was now history, and breaking frontiers to find new oil was ‘incredibly difficult’. Although BP’s skills in exploration were acknowledged by its rivals, the search beneath the Gulf of Mexico was particularly brutal. Excluded from most playgrounds, at best only one in three of BP’s operations would strike oil.
At the end of the show the 13 headed for a hotel conference room, each clutching a personalised folder listing 50 potential sites for test holes off West Africa’s coast, in Asia, South America and the Gulf of Mexico. Over the next four days they would decide where to spend more than $1 billion drilling through sand, salt, clay and rock. BP’s future depended on finding new oil but there were no guarantees. Although the exploration business was dependent on science, much remained beyond their control. Even the best geologists tended to deploy just three words: ‘possibly’, ‘probably’ and ‘regrettably’.
Like the others in the room, David Rainey had learnt his craft during four years in Alaska. In 1991 he had moved to the Gulf of Mexico. ‘I’ve been there when we’ve hit,’ he sighed, ‘and also when we missed. A dry hole and you feel like jumping out of the window. The emotions are indescribable.’ In 1999 some had been convinced that ‘Big Horse’, a test drill in the Gulf, was a certainty, but the news from the geologist on the rig that the fossils brought up from the deep were Upper Cretaceous rather than Miocene cast a gut-wrenching gloom across the Operations Room. ‘We’re 60 million years out,’ moaned the blonde team leader. Any oil would have been ‘overcooked’. Every one of the experts in the HIVE had suffered similar agonies.
In recent years, dry holes had wrecked major oil companies. The skeletons of Gulf, Texaco, Arco and other past icons mercilessly testified that only the fittest and bravest survived. By placing enough bets to balance the odds, BP’s executives calculated that what the industry uncharitably called ‘orphans’ would not sink their company. Success depended on taking risks and limiting mishaps, not least thanks to inspired luck. BP had made a fortune in Alaska when Jim Spence, the company’s chief geologist in Alaska, struck oil in 1969 after deciding to drill on the rim of a potential reservoir, because the cost of the licence on the ‘sweet spot’ was too expensive. Its rival Arco, drilling in the ‘sweet spot’, found only non-commercial gas. Alaskan oil saved BP, but did not make the company immune to future errors. In 1983 it invested $1.6 billion to drill in the frozen waste at Mukluk in Alaska. That they would find at least a billion barrels of oil, BP’s geologists told newspapers, was ‘certain’. Instead, they hit salt water. The oil had leaked away. ‘We drilled in the right place,’ said Richard Bray, the local chief executive, ‘but we were simply 30 million years too late.’ For the next 10 years, BP became complacent and chronically risk-averse, searching for oil in the wrong places.
Rainey enjoyed the rigorous challenges during those impassioned days in the Exploration Forum. ‘Nothing gets through on salesmanship and goodwill,’ he warned. The debate ranged between ‘concepts’, immature proposals that were a twinkle in someone’s eye; to ‘play’, which was work in progress; and finally to ‘prospects’, which offered a serious chance to find oil. ‘We’ve got to focus on the big stuff,’ Rainey reminded his experts. Like its major rivals, BP could only survive by finding huge reservoirs, or ‘elephants’. ‘Little things make no difference to BP,’ John Browne had ordained, knowing that finding a small field could take as long as finding a big one. Failure, Rainey knew, would delight his rivals. Across the globe, Shell, Chevron, Exxon and smaller adversaries were holding similar conferences. Amid ferocious competition, the challenge was to accurately assess the cost of failure. Like Exxon and Shell, BP had been accused of being averse to risk, too eager to return money to shareholders rather than to invest in finding new oil. ‘Volume versus risk,’ said Rainey, echoing an oil industry truism. Reducing the 50 potential wells to 20 eliminated some risk. The holes chosen, Rainey predicted, would ‘glow in the dark’.
His self-confidence reflected oil’s changing fortunes. Twenty years earlier oil had sold at less than $10 a barrel. Without money, exploration was limited. In the late 1980s the Gulf of Mexico had been classified as an area where inadequate technology prevented new oil being found. Rising oil prices since 2003 had invigorated the search, and technological advances delayed the death certificate. With prices hovering around $25 a barrel, the public assumed that the international oil companies would continue to produce unlimited supplies. The oil chiefs knew the opposite. Finding new oil was becoming harder, and opportunities to enter oil-producing countries were diminishing, although new technology consistently embarrassed the pessimists. Within the Big Brain Room were the architects of BP’s latest success, which had restored the company’s credibility. In 2004 ‘Thunder Horse’, a 59,500-ton, semi-submersible cathedral, the world’s biggest platform, had been towed from Korea and positioned over an ‘elephant’ reservoir in the Mississippi Canyon, identified by the US Department of the Interior as Block 778, 125 miles south of New Orleans. Designed to extract an astounding 250,000 barrels of oil and 200 million cubic feet of natural gas from four miles beneath the waves every day, it led to chatter among the Gulf’s aficionados that BP was overtaking Shell, the pathfinder in the region.
Since 1945 oil had been extracted from the Gulf’s shoreline waters, especially by Shell. For years the deep-water limit was assumed to be 1,500 feet. John Bookout, the head of Shell’s exploration in the Gulf, challenged that assumption, believing that the Gulf, like Prudhoe Bay in Alaska, would minimise America’s reliance on imported oil. In May 1985 the drill ship Discoverer Seven Seas began boring 12 exploratory wells in 3,218 feet of water. Oil was found, and a Ram-Powell platform weighing 41,000 tons was towed to the site. That project, also financed by Amoco and Exxon, confirmed that oil could be recovered from the depths and be piped 25 miles along the sea bed to terminals.
Bookout next focused on the nearby Mars field, 130 miles south-east of New Orleans. In 1987 Conoco had lost millions of dollars drilling dry holes there. Unable to afford further exploration from rigs floating 3,000 feet above the sea bed, the company sold the rights to Shell. Bookout was convinced that the drill should have been placed just 400 yards away. Soon after Shell’s purchase, Jack Golden, BP’s head of exploration in the Gulf, offered to buy a third of Shell’s investment in return for sharing a proportion of the cost. Passive investment, or ‘farming in’, by competitors was not unusual in big projects. Even the mighty oil corporations needed to mitigate their risks. Golden had regretted BP’s tardiness in bidding for the US government’s first round of ten-year licences for deep-water exploration in the Gulf, and his irritation was compounded by Shell’s perfunctory rebuff of his offer. Shell’s executives did not want to share their potential profits, especially with BP. Over the previous decade they had enjoyed watching BP’s struggle to survive, and some hoped their rival might even go out of business, allowing Shell to absorb the wreckage. But just one year later the companies’ fortunes were reversed. Shell had wasted $300 million drilling a succession of dry holes in the Chukchi Sea off Alaska. In urgent need of finance, the same executives had reluctantly agreed to Golden’s offer to share in the Mars field. In return for paying 66 per cent of the well’s costs, BP would receive one third of Mars’s income. In May 1991, Shell struck oil. ‘Getting Mars was a bonanza in 1988,’ said Bob Horton, BP’s chief in America. ‘Mars saved BP from bankruptcy.’ Dean Malouta, Shell’s skilled Greek-Italian inventor of sub-sea technology, would bitterly agree: ‘We are crazy to give BP a lifebelt. They brought nothing to the table except money.’
Shell’s discovery, and the introduction of new engineering techniques, washed aside a whole lexicon of uncertainties and prejudices which had gripped the Gulf’s explorers. Not only had Shell’s engineers drilled deeper than anticipated, but the gush of oil was far greater than anyone had expected. Even before the rig for Mars was built and towed from Italy, Shell had broken another world record. In 1993, using a rig tied to the sea bed by barn-sized anchors in 2,860 feet of water, the company’s geologists had found a giant reservoir called Auger 5,000 feet below the sea bed, while in 1995 at the nearby Mensa field, abandoned in 1988 as technically too difficult, Shell’s new technology and about $290 million enabled oil and gas to be extracted from 5,400 feet.
Finding those big reservoirs of oil had been coups for the geologists. In their Houston office, John Bookout’s team had plotted and recreated an area of the Gulf called the Mississippi Basin. Located just beyond the mouth of the Mississippi river, they traced where the river’s sand had been deposited 25 million years earlier, and deduced the sites of potential oil reservoirs. Their findings were confirmed in 1995. Predictions that production at Mars would peak at 3,500 barrels a day were far outstripped as it hit 13,500 barrels a day, with the promise of 30,000 in the future. Dean Malouta was an equal architect of that success. At Auger’s wellhead, 5,412 feet below the sea’s surface, Shell installed a production system and pipeline to bring the oil onshore. The production rig was held in position by six thrusters on its hull, linked by computers to acoustic beacons on the ocean floor which transmitted signals to hydrophones on the rig. Shell’s triple success reinforced the entrenched despondency in BP’s offices across town.
Ever since David Rainey arrived in Houston in 1991, the gloom in BP’s headquarters had been seared on his mind. After three years’ work, BP had hit yet another dry well. ‘Sycamore’ in the Gulf’s KC Canyon had wasted $20 million. Jack Golden had taken the failure personally. ‘Every time we hit dry hole,’ the wizened American explorer told Rainey, ‘we look back and see that we didn’t have to do this.’ In the race for survival, Golden was as conscious as others that the oil majors’ share of the world’s reserves had fallen to 16 per cent, and the national oil companies, driven by politics rather than economics, were less inclined to give them access to their oilfields. Five years later, BP’s continuing depressing record imperilled the company’s existence. At least BP could rely on its share of the profits from Shell’s success at Mars – where two more reservoirs would be found at deeper levels, promising to deliver 150,000 barrels a day – and learn lessons from Shell’s success, replicated in ‘Bongo 1’, 14,700 feet below the sea off Nigeria’s coast. ‘We’re taking two years off and focusing on learning,’ Golden declared.
