Friday 12 June 2015

Comeback kid from the East

By Rob Watts for Upstream

London, 12 June 2015

Oil industry veteran Alexander Temerko fled from Russia amid the Kremlin’s attacks on Yukos. Now with OGN Group, he is increasingly influential in the world of politics

The UK’s new Conservative government has been given a unique opportunity to build a comprehensive national energy and industrial programme with the North Sea oil and gas sector at its heart — but lasting success will only be achieved if politicians take heed of industry advice. 

So says Alexander Temerko, the outspoken Ukrainian-born industrialist and former number-two at Yukos, who fled to the UK more than a decade ago amid the Kremlin’s legal assault against the Russian oil producer that led to the incarceration of former head Mikhail Khodorkovsky. 

As deputy chairman of Newcastle-based platform builder OGN Group since 2008, Temerko has assumed a high-profile position in his adopted country’s energy sector. 

He has combined this with an increasingly active role in UK political life, donating large sums to the Tory party in support of MPs and election candidates, and developing close ties to its leaders, including Prime Minister David Cameron. 

Relieved that the Conservative Party is now unshackled from their former Liberal Democrat coalition partners, he says: “Today is a very exciting time. The Lib Dems have left a very bad legacy and I am very happy that we can now build a proper Conservative government.”

The centre-left Lib Dems lost 49 of their MPs, including former energy secretary Ed Davey and former business secretary Vince Cable, in what were disastrous polls for the party in May.

Temerko reserves a certain amount of vitriol for both, accusing Davey and Cable of being “feeble” and “short-sighted” for neglecting big business in favour of supporting small and medium companies. 

A large number of major businesses are in the oil and gas sector, he points out, and support for those will create opportunities for the smaller ones.

Temerko says he is particularly pleased with the appointment as Business Secretary of Sajid Javid, who has “quite a good knowledge of our sector” thanks to his involvement in discussions with oil companies on tax concessions during his time at the Treasury. 

He is hopeful Amber Rudd will make “a very big contribution” as new Energy Secretary, but emphasises this can only be done “if she listens to industry”. 

Temerko would like her to launch a “broad commission” as soon as possible to collect opinions from major employers about the main issues affecting the oil and gas sector and fabricators who serve it. 

“The previous government did not listen to industry representatives. Maybe she will, but only time will tell,” he says. 

Feasible strategy 

Temerko believes UK energy policy must focus on conventional gas alongside new nuclear capacity and a reorientation towards interconnectors.

This is another area in which he has interests as the head of a consortium investing in one, as the only feasible strategy for securing supply and mitigating rising prices while meeting emissions targets. 

He believes that the North Sea, despite its current challenges, still has a major role to play.

In 2010, Apache North Sea placed an order with OGN to build the Forties Alpha Satellite Platform at its yard in Wallsend on the River Tyne, and since then work has followed from the likes of Talisman on the Montrose Area Redevelopment project, and from EnQuest on refurbishing the EnQuest Producer floating production, storage and offloading vessel.

 However, with operators scaling back spending to cope with the drop in the oil price, the outlook for the latter part of the decade is uncertain.

OGN management has long been critical of what they perceive as the UK government’s failure to insist on minimum levels of local content in North Sea oil and gas projects.

Various coalition ministers have pointed out over the years that much work goes on behind the scenes to encourage North Sea operators to place orders with UK yards, but claim they are prevented from insisting for fear of breaching European Union competition legislation.

Temerko hopes government will now adopt a more pragmatic approach as, he believes, other EU nations do.

 “We try to be holier than the holy Pope,” says Temerko. 

The UK’s oil and gas construction supply chain currently employs about 20,000 people and Temerko believes the government needs to do all it can to keep them employed. 

A “technical protection” level of 50% should be introduced in UK schemes, he says. 

Temerko has great ambitions for the north-east of England and would like to see Newcastle grow into the type of industrial power hub it used to be back in the early 20th Century. 

“We have a chance to build a comprehensive energy plan, including offshore oil and gas developments. But this is impossible without senior industry involvement,” he says. 

Temerko’s life and times…

ALEXANDER Temerko was born in 1966 in Ukraine, then part of the USSR.

In 1983, aged 17, he moved to Moscow to study electrical engineering. 

He began his professional life in the field of environmental science, later being appointed as general director of the environmental arm of the All-Union Scientific & Industrial Association. 

After the collapse of the Soviet Union, Temerko supported the Russian democratic movement and joined the team that had formed around Boris Yeltsin, the first president of the Russian Federation. 

A series of roles in agencies responsible for overseeing the welfare and supply of the new Russian military forces then followed before he resumed his career as an industrial manager in 1995, leading Russkoe Oruzhie, which produced arms for the Russian military. In 2000, Temerko embarked on a career in Russia’s booming energy sector, becoming deputy chairman at Yukos. 

Following the arrest of Mikhail Khodorkovsy in 2003, he took over as the head of the company’s management. 

However, in 2004, under mounting pressure from the authorities, he fled to the UK, where he continued to fight what he has called “the growing corruption and despotism of the Russian state”.

In 2005, Moscow’s attempts to extradite him failed when judges in London said he would not get a fair trial. 

He left the company the same year to focus on private business ventures and to embark on a political career in the UK. 

In 2008, he became deputy chairman of OGN and won UK citizenship in 2011.


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