How to Be ExxonMobil

(Photo: Thomas Hawk)

Foreign Policy interviews Steve Coll about his new book Private Empire, which is about ExxonMobil’s ongoing dominance. Coll explains the company’s competitive strategy, which it relies on when competing against other companies for African contracts as well as with state-owned oil companies in the Middle East:

I also think that the way they win these deals in a place like Chad or Papua New Guinea or Angola is, in effect, they go to the host country and say: “Look, we recognize that you can deal with the Chinese, and you’ll get soft loans and guns and things that you think are more valuable than what we can offer you, but what you’ll also get is really lousy project management. You’ll get less oil pumped, you’ll get less royalties, you’ll get less taxes, so you’ll end up net poorer. Why not come work with us under our rule of law, under a really straightforward contract? And what our record shows is that you’ll end up with more cash faster — and then you can use that cash to buy whatever guns you want? But you’ll have the money to carry out what ever plans you have; and we’re reliable, we’ll come in on time.”

It’s sort of like if you’re buying a new appliance, and you’re going to the store and somebody offers you rebates and a free toaster and three other things to incentivize you to buy one brand. Well, you look at that brand and you think oh, that thing’s going to break down in a few years. Whereas the other one, it’s more expensive, but it’s top of the line. And that’s kind of ExxonMobil’s argument.

And here’s a  peek at how the company assesses geopolitical risk in the countries where it does business:

They have basically a political risk department that is central to their corporate planning and to their annual strategy discussions at headquarters. It’s run by a woman named Rosemarie Forsythe who used to be on the National Security Council, and she basically goes into the management committee — which is the top group of executives that’s looking out over the world from quarter to quarter and year to year — and she presents political risk analysis, both regional and global. I spoke to her a little bit about what her PowerPoint show sounds like, and basically she describes a world in which more and more of the oil that ExxonMobil is going to be interested in or already owns is in unstable places; that’s what the basic map looks like. They color code it and they divide the world into different groups and so forth, but fundamentally the oil they can access is in unstable places. Now an academic might also point out that the oil is in unstable places because oil can be destabilizing in weak countries, but I’m not sure ExxonMobil does that analysis.


frankenduf

(said to a government official)- "under our rule of law... you can use that cash to buy whatever guns you want"- heh- the history of colonialism summed up in one sentence

Mike B

I would actually like to see some mega-corporation like Exxon become a sovereign entity with its own armed forces and some of those non-nuclear aircraft carriers the United States just retired. Before you go clicking dislike people need to realize that oil companies already are able to use force to get what they want, they just externalize the costs through existing sovereign armed forces, including those of the United States. If Exxon had its own armed forces they would actually be explicitly responsible for its own security costs and completely transparent in their "foreign policy" actions. It would also be nice to see Exxon roll up to Venezuela with an carrier battle group the next time Hugo Chavez tries to nationalize an oil field.

Travis

What you are suggesting is akin to the privatization of war. Why not just let ever megacorp/multinational buy an army. But do we really want a world where we have exxon send its PSF (Private Security Force) into say, Syria to back Assad (or the Rebels) and crush the other side to ensure / secure rights to the oil / groundwater / labor in the country? Or worse yet, as you supposed the idea that multinationals would create a war to prevent a nation from nationalizing one of its natural resources...

Seems awfully dystopian for my tastes.

John McDonald

The 2nd paragraph is really hilarious!! Congratulations on bringing up the true creative writing of 2012 so far.