wallstreetjournaleurope_20170111_The_Wall_Street_Journal___Europe

A8| Wednesday, January 11, 2017 THE WALL STREET JOURNAL.

IN DEPTH

Experts have advised that escalator riders should stand, not walk. Above, Hong Kong’s Times Square mall.

XAUME OLLEROS/BLOOMBERG NEWS

The Senate will weigh how the experience of Rex Tillerson, former CEO of Exxon, prepares him to be secretary of state.

J. SCOTT APPLEWHITE/ASSOCIATED PRESS

subway entrances tend to have

only one escalator that always

goes up.

Escalators can be built to

withstand that problem, Mr.

Zhang says. The bigger issue is

that escalators, which are typ-

ically steeper and have bigger

steps than staircases, aren’t

designed to be walked on.

“I’ve been opposed [to

walking on escalators] for the

past 10 years,” says Mr. Zhang.

“I think it’s extremely danger-

ous.”

China isn’t alone in wres-

tling with proper policy for es-

calator use. Last year, London

tried an experimental “no

walking” policy on escalators

in one underground station in

a bid to improve safety, to

mixed results. In Singapore,

Seoul, and Taipei escalator us-

ers have also been encouraged

to reconsider the wisdom of

standing to the side.

In 2014, Japanese railways

launched a “Let’s All Grab a

Handrail” campaign, though

many Tokyo commuters con-

tinue to ignore the exhorta-

tion. Those who do stand gen-

erally still move to one side to

let the climbers pass.

Mr. Zhang of the elevator

association says compared

with other countries, the dan-

gers in China are greater be-

cause Chinese subways often

try to cut costs by leaving less

space for exits. That means

steeper, narrower—and hence,

riskier—escalators. Chinese

subway escalators often ex-

ceed the 30-degree incline

considered standard in the

West, he said.

Subway operators in Bei-

jing, Shanghai and Nanjing—

cities identified in local media

reports as no longer advocat-

ing “stand right, walk left”

policies—didn’t respond to

questions about whether they

planned to actively encourage

standing on both sides.

Several grisly accidents in-

volving escalators in shopping

malls grabbed media attention

in China in recent years. Over-

all, China recorded 22 acci-

dents involving elevators, es-

calators and moving sidewalks

in the first half of 2016, caus-

ing 16 deaths, compared with

58 accidents and 46 deaths for

all 2015, according to the gov-

ernment’s quality supervision

and inspection agency.

Commuters in Beijing thus

far seem largely unaffected by

the debate, with most sticking

to the right.

At Beijing West’s crowded

subway station, safety officers

say people stand and run on

both sides of the escalators,

when they can. “People have

big suitcases, and usually

there is no space for them to

walk left,” says Chang Zen-

ghui, a safety worker. “New

rules or old rules, we don’t

care. The only principle for us

is ‘safety first.’ No stampede.

No crowding. That’s it.”

—Olivia Geng

contributed to this article.

Hundreds of millions of
people are expected to flood
into train stations and airports
during the annual Lunar New
Year holiday starting Jan. 28,
including more than 250,000 a
day on the 14 escalators inside
Beijing West Train Station, ac-
cording to the state-run Bei-
jing Daily.
Concerns over escalator use
became a public issue last
month after the city of Nan-
jing’s subway operator issued
a social media post that cited
statistics saying 95% of escala-
tors experienced severe wear
and tear on the right side.
“No longer advocate ‘stand
right, walk left,’ ” the post
said. “It’s more important to
stand still and hold the rail!”
Uneven wear is indeed a
concern, says Zhang Lexiang,
general secretary of the China
Elevator Association, which
also covers escalators and
moving walkways. Where sub-
way entrances in the West of-
ten have multiple escalators
that can alternate up and
down duty, he says, Chinese

ContinuedfromPageOne

RIDE

Western oil giants dismissed

state-owned companies as too

bureaucratic and inflexible,

Exxon committed to an ambi-

tious project with Rosneft to

develop an oil and gas field

near Sakhalin Island. It would

cost billions of dollars to de-

velop and be one of the most

technically complex projects

in Exxon’s history, with oil

and gas deep beneath sea ice

in an area prone to earth-

quakes and 50-foot waves.

Over the years, it would be

expanded multiple times. In

the past decade, the partners

have produced more than 300

million barrels from three

separate fields, with a poten-

tial peak of 200,000 barrels a

day, Exxon said.

Mr. Tillerson had a key

person on the ground, a per-

sonable, Russian-speaking

Croat named Zeljko Runje,

who formed close relation-

ships with Rosneft executives

and years later would help

pulloffanevenbiggerRus-

sian deal for Exxon.

When it first partnered

with Exxon, Rosneft “had no

equipment, they had no tech-

nology,” a former Rosneft ex-

ecutive said. Exxon’s expertise

and financing helped build

Rosneft into one of the

world’s largest producers,

which strengthened Russian

President Putin’s grip on

power. Energy revenues al-

lowed him to boost spending

at home and to project power

abroad; Rosneft’s dominance

gave him control of Russia’s

most important industry.

In 2004, the Kremlin

seized assets from OAO Yu-

kos, then the country’s largest

oil company, and Rosneft took

control of its main production

unit, becoming the country’s

second-largest producer.

Exxon worked closely with

Moscow to devise legislation

on taxation and other issues

that affected its investment,

according to Igor Yusufov,

Russia’s energy minister from

2001 to 2004.

Mr. Tillerson met with

ministers and gave sugges-

tions for legislation, Mr.

Yusufov said. “He met every-

one,” the Russian said. “He

helped us to formulate the re-

lationship between the state

and investors.”

During a U.S.-Russia energy

summit in Houston in 2002,

their meetings. Mr. Sechin

was careful to show Mr. Til-

lerson he had the highest-

possible backing. Two or

three times a year or more,

Mr. Sechin would ask Mr. Pu-

tin to speak, by phone or in

person, with Mr. Tillerson,

said one of the people.

Landing the Arctic

Mr. Sechin came to like Mr.

Tillerson because he was

transparent and forceful in his

communications—and was one

of the few Western executives

strong enough to push back

against Mr. Sechin, said people

familiar with the matter.

The relationship helped

Exxon land one of its biggest

coups. In 2011, Exxon rival BP

PLC reached a deal for access

to a giant Rosneft-controlled

Arctic field, but BP’s oligarch

partners in a separate Russian

joint venture blocked the

deal.

Exxon’s longtime Russia

hand, Mr. Runje, who had

been key to the Sakhalin proj-

ect more than a decade ear-

lier, saw an opening and sent

a message to Mr. Tillerson,

said people familiar with the

matter. Mr. Runje declined to

comment.

Messrs. Tillerson and

Sechin hashed out a $3.2 bil-

lion deal that was to be one

of the biggest exploration

contracts ever. It gave Exxon

access to the Arctic fields BP

lost, as well as basins in Sibe-

ria and in the Black Sea.

Mr. Putin, who had come to

trust Mr. Tillerson as a man

of his word, blessed the deal

and said investment could

eventually reach $500 billion.

Mr. Putin later awarded Mr.

Tillerson the Russian Order of

Friendship, the country’s

highest honor for foreigners,

after a request by Mr. Sechin,

according to a person familiar

with the matter.

By late 2014, when the

partners hit oil and gas in the

Arctic, sanctions by the U.S.

and other countries were in

place barring companies from

sending oil and gas explora-

tion technology to Russia,

bringing operations to a halt.

In Washington, Exxon lob-

bied against the sanctions.

Mr. Tillerson and others told

senior officials that because

of the complexity of the Arc-

tic project Exxon couldn’t im-

mediately pull out without

significant safety and envi-

ronmental risks.

The CEO also said U.S.

sanctions applied to an exist-

ing project, unlike European

sanctions, which exempted

developments already under

way, people familiar with the

matter said.

Exxon withdrew from its

Arctic project, and Mr. Tiller-

son stayed home from a St.

Petersburg economic summit

in 2014 for the first time in

years. He continued to attend

to Russia business, including

efforts to build a gas export

plant at Sakhalin and other

operations.

“Over the years, I think we

have earned each other’s re-

spect,” Mr. Tillerson told stu-

dents at an event in March

2015 at Texas Tech University.

When Exxon says “yes,” he

told them, the Russians would

know that the company would

“follow through on that yes.

Your commitment means

something. And so I think it’s

the most important attri-

bute.”

is expected to consider Mr.
Tillerson’s nomination on
Wednesday, is to what extent
this kind of expertise pre-
pares him for the job of sec-
retary of state. He has vast
experience hammering out
multibillion-dollar deals that
potentially span decades with
government leaders of all
stripes. On the other hand, a
company is not a country.
The former Exxon chief’s
dealings with Rosneft are
likely to be a major line of
questioning from both Repub-
licans and Democrats, many
of whom have said they are
uncomfortable with Mr. Til-
lerson’s close ties there in the
wake of Russia’s alleged hack-
ing attack on figures in the
Democratic Party.
The Russia deals added
hundreds of millions of dol-
lars to Exxon’s bottom line
and billions of barrels of po-
tential reserves to bolster the
company’s future production.
At the same time, they ran
afoul of State Department pri-
orities at a time when the U.S.
was using sanctions to try to
check Russian military inter-
ventions in Ukraine.
For Exxon, one of the
world’s largest publicly
traded oil companies, the re-
sults of the Russia deals are
mixed. The deals struck in
2014, which technically ex-
panded projects already in
operation, didn’t violate sanc-
tions, which targeted the
spread of oil and gas technol-
ogy. But other projects, espe-
cially a vast Arctic invest-
ment, ground to a halt,
blocking Exxon’s access to
rich reserves it hoped would
ease its longtime struggle to
find new resources.
“This is an industry with
very long timelines,” said
Alan Jeffers, an Exxon
spokesman. “The current situ-
ation prevents us from activi-
ties in the area that are sanc-
tioned, but we see that as a
pause.”
Mr. Tillerson declined to
comment. Mr. Sechin and
Rosneft didn’t respond to
emailed questions.
Mr. Tillerson, who joined
Exxon in 1975 and became
CEO in 2006, specialized in
the types of deals that typi-
fied the oil industry in the
run-up to the recent price
crash: Giant agreements,
sometimes in unstable places,
that cost billions of dollars to
develop and aimed to produce
huge volumes of oil and gas
over decades.
He spent hours with the
company’s negotiating teams,
preparing for every potential
aspect and plotting tactics,
including the theatrical, ac-
cording to people he worked
with.
In a meeting in Yemen in
the 1990s, he threw a book
and stormed out of talks. The
tantrum was preplanned, one
person said. “Anger is a strat-
egy, not an emotion,” Mr. Til-
lerson told colleagues.
He negotiated deals worth
more than the GDP of some
countries with officials who
had vast power but lacked ex-
pertise. That meant he dealt
with concerns other than
money, such as a leader’s de-
sire for Exxon to educate local
workers or help a state-owned
oil company gain technology.

ContinuedfromPageOne

STATE

Mr. Tillerson wooed Mr. Yusu-

fov with a trip to Exxon facili-

ties, where he showed the

Russian minister a 3-D model

of the Sakhalin project as it

was at the time and as it

would look at peak produc-

tion.

Mr. Tillerson worked

closely with Rosneft execu-

tives as the project began

producing in 2005. He and

then-Rosneft CEO Sergey Bog-

danchikov landed their pri-

vate jets at tiny Teterboro

Airport, in suburban New Jer-

sey, in 2006 and discussed

Sakhalin and Rosneft’s com-

ing initial public offering, said

a person familiar with the

talk.

Mr. Sechin, who had spent

years in intelligence in Africa

and elsewhere and later be-

came a Kremlin political oper-

ative close to Mr. Putin, had

become chairman of Rosneft

in 2004. He took over as CEO

in 2012 with the aim of ex-

tending its reach. His under-

lings quickly came to fear his

3 a.m. calls ordering them to

pack for a trip to Asia as

much as his outbursts at

meetings over frustrations

like project delays, former ex-

ecutives said.

He and Mr. Tillerson devel-

oped a comfortable rapport,

said people who attended

Untapped Potential

Exxon holds the rights to more acreage in Russia than in all the rest

of its world-wide operations, but the company's efforts to develop

the resource have been stymied by sanctions.

Exxon's majorholdings

Russia

U.S.

Canada

Germany

Australia

The Netherlands

Nigeria

Papua New Guinea

63.

Million acres

14

6.

4.

1.

1.

1.

1.

Wells drilled in 2015

U.S.

1,087.

Canada

52.

Germany

0.

The Netherlands

3.

Nigeria

2.

Russia

1.

Australia

3.

Papua New Guinea

1.

The Kremlin’s state-controlled oil company

has grown in partnership with Exxon.

Source: the companies THE WALL STREET JOURNAL.

Note: 2012-2015 figures converted from rubles to dollars at the average exchange rate for the

year, as Rosneft changed from reporting in dollars to rubles.

Rosneft’s revenue

First production

from Sakhalin project

Sanctions on Russia for

seizing Ukrainian territory

$150 billion

0

75

2000 2005 2010 2015

He drank tea with tribal

leaders and showed off Exxon

facilities to visiting dignitar-

ies.

In interactions with Rus-

sian leaders, Mr. Tillerson

avoided giving any impression

of American superiority, espe-

cially amid the post-Cold War

tensions of the 1990s.

In a 2004 interview with

The Wall Street Journal he

described how when a Rus-

sian minister in the 1990s

slammed his fist on the bar-

gaining table in a dispute

over a permit, raising images

of former Soviet leader Nikita

Khrushchev, he gingerly

brought him back to the dis-

cussion.

“You make yourself very

aware of it, and almost go out

of your way to make sure

there’s nothing that conveys”

a superior attitude, he said.

At the same time, he rarely

budged on terms, seeking to

project strength, said people

familiar with his negotiating

style.

At the Metropol

Mr. Tillerson arrived in

post-Soviet Russia in 1997 to

chase the same prize as every

other big Western oil execu-

tive: access to the country’s

vast stores of untapped crude.

He set up in a suite in the

Metropol Hotel, just steps

from Red Square, and tried to

make sense of a Kremlin in

turmoil. Russia cycled

through six prime ministers

in Mr. Tillerson’s first 14

months.

Even before the musical

chairs ended with Vladimir

Putin in charge, in 1999,

Exxon realized something its

Western rivals didn’t. Joining

with the Kremlin could shield

the company from hostile

takeovers by other state-

owned firms and regulatory

obstacles from the Russian

government.

At a time when other

The oil executive’s

dealings with Rosneft

arelikelytobeakey

line of questioning.

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