For many onlookers, the election of Donald J. Trump to the presidency was big news for big oil. Trump was on the record as calling climate change a "hoax," and his transition team had a good relationship with Russia, a country hoping a new president would thaw economic relations between the two countries.
Then, when Trump named former ExxonMobil Chief Executive Officer Rex Tillerson his Secretary of State, market watchers said the deal was a shoo-in. But, they should have learned by now, where Trump is involved, you can’t take anything for granted. Last week the Trump administration denied ExxonMobil's request to bypass economic sanctions in order to drill for oil in Russia.
The deal seemed like a good one for all involved. Trump wants to be on friendly terms with big American business, Russia has enjoyed a relatively decent relationship with ExxonMobil for about two decades, and you know the oil company is excited about tapping into what they believe are massive oil patches in Russia. ExxonMobil was so excited, they agreed to work side-by-side with NK Rosneft PAO, Russia’s state-owned oil company.
Even more to the point for Exxon-Mobil, the company has outstanding business obligations in Russia, deals that were prevented by the sanctions imposed by President Obama. Making good on that deal would allow Exxon to drill offshore in the Black Sea as well as the Kara Sea in Siberia. That agreement was followed up a few years later by a deal that would allow the companies to work together on a natural gas plant in eastern Russia. A year after that deal was signed, the U.S. and the EU dropped sanctions on Russia over its actions in Ukraine.
Those sanctions stifled all the work imagined as a result of that deal. Drilling stopped. Building stopped … property sat empty, and equipment sat idle. Then came Trump, and the promise of renewed business with Russia. And Tillerson, who, while still with Exxon, actually led the Rosneft agreement. Once again, the application appeared a foregone conclusion. Except, the Trump’s Treasury Department denied Exxon’s request. The company would not get their loophole after all . . . at least not yet.
So, what happened? Well, turns out, it was a combination of politics and public relations. When the news broke that Exxon wanted a waiver to start drilling, some in the U.S. Senate registered shock and disgust . . . and that reaction came from both sides of the political aisle. How would it look, they reasoned, for an American company to be working directly with a Russian company while the two countries were engaged on opposite sides of the chaotic conflict in Syria.
Other market watchers expressed surprise that Exxon would even try this end-around approach, given the negative publicity attached to it. And public relations is where this news will likely hurt the most. No one really expects Exxon stock to dip, but their public face might be a little bruised.
Ronn Torossian is one of America’s foremost Public Relations executives as founder/CEO of 5WPR, a leading independent PR Agency. The firm was honored as PR Firm of the Year by The American Business Awards, and has been named to the Inc. 500 List. Torossian is author of the best-selling "For Immediate Release: Shape Minds, Build Brands, and Deliver Results with Game-Changing Public Relations." For more of Ronn Torossian's reports, Go Here Now.
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