The Pipeline Blueprint
Tiffany sat at the head of the long table in the central seat of honor. Flanking her on both sides were twelve executives from the Strategic Planning Office, six on each side. The interesting common thread was that every single one of them had worked with her at T&U Research. It hadn’t started out that way. Chevron had plenty of capable people, and when the Strategic Planning Office was first established, about four internal experts had been brought in. But as projects progressed, they caused various troubles and were eventually let go. The biggest incident had been leaking critical information to the outside. To their aunts, specifically. Or they had tried to lecture her as if they were oilfield development experts. It wasn’t for nothing that, back when Tiffany first joined Chevron many years ago, she had asked Yoo Jae-won how to deal with older executives. Even though she was part of the royal family, inside Chevron she had been treated like a complete novice.
Only after she successfully led several major projects—from the Texaco acquisition to the development of the Irkutsk oil field—did the existing executives begin to look at her differently. Getting to this point had been incredibly difficult. Even so, Tiffany never showed any of it at home. She didn’t want to bring company problems back and make her beloved husband anxious. Instead, she found her own answers. Changing her style was one of them. At home she kept her natural appearance, but when she went to the office she borrowed the image of a cold city professional. She wore monochrome black or gray suits and slicked her hair back tightly with pomade. The style change had been surprisingly effective. The number of executives who used to try to teach her, claiming their way was better, dropped sharply. After that, as Tiffany continued to accumulate achievements and demonstrate her competence, her influence grew naturally. By the time she became a board member, no one dared look down on her anymore.
That was why the Irkutsk oil field development project could fully reflect her intentions. A young woman seated to Tiffany’s right operated an iWorks laptop, changing the image on the large front screen while providing explanation.
This is the blueprint for the East Siberia-Pacific Pipeline, agreed upon with Transneft.
Transneft was Russia’s leading pipeline construction company and a chaebol that held a monopoly on pipeline projects within the country. They had proven their capability by single-handedly building the pipeline that carried oil from the Caspian Sea fields to Western Europe. Since then, they had dominated every pipeline project in Russia and continued to grow. For a country like Russia, with so many inland oil fields, the simplest and most reliable way to transport extracted crude to consumers was through pipelines.
The Irkutsk field was no different. Stably extracting crude from the wells was important, but disposing of that crude was an even bigger issue. There were essentially two choices: sell it to Rosneft, Russia’s state-owned oil company, or handle the disposal themselves. Tiffany had chosen the latter. And in that disposal method, she had played an extremely bold card—pipeline construction.
The Siberia-Pacific Pipeline project, stretching 4,739 kilometers from Tayshet in Russia through Kirensk and Olekminsk all the way to Kozmino in Vladivostok, was the main subject displayed on the screen. Tiffany could not have decided to build such a long pipeline on her own. The diagram above was part of Russia’s national energy strategy to transport crude extracted from inland fields all the way to the Pacific and sell it to China, Korea, Japan, and the United States. Tiffany’s decision was to insert herself into that plan. By simply connecting a branch line from Irkutsk to Kirensk, they would be able to use the East Siberia-Pacific Pipeline.
“Transneft has sent a positive reply regarding equity participation.”
Even though Transneft had grown significantly, they could not bear the cost of constructing a 4,739-kilometer pipeline alone. That was why they offered equity stakes to oil companies or investment firms that would use the pipeline and recruited investors. Of course, not just anyone could participate. A pipeline represented energy power, so only those who could align with Russia’s energy strategy were allowed in.
In the past, it would have been difficult for Chevron to join the East Siberia-Pacific Pipeline project. Even if they had participated, the equity guaranteed in return for their investment would surely have been small. After all, being an American oil major was a negative factor in Russia. But the situation had changed completely now. The unprecedented success of the Irkutsk oil field development had solidified Chevron’s position. As a result, the equity distribution for the East Siberia-Pacific Pipeline construction could be arranged in a very favorable direction. In fact, the bigger concern now was the internal opposition within Chevron—complaints about why they should invest large sums in unstable Russia.
“Transneft has stated that the maximum equity they can transfer to us is 25%. The price is currently being discussed in the range of three billion dollars.”
“As expected from Samantha!”
It was an amount that made people gasp, yet Tiffany did not hesitate to praise her. Samantha was a woman at least ten years older than Tiffany. Nevertheless, Samantha seemed completely unconcerned about age. She bowed deeply in response to the compliment, expressing her gratitude. She had been working hand-in-hand with Tiffany since the T&U Research days and was now the talent Tiffany trusted most. Samantha, fully aware that Tiffany valued her highly, carried out her assigned duties more diligently than anyone else.
The task currently entrusted to Samantha was negotiating with Transneft. The practical negotiations to participate in the East Siberia-Pacific Pipeline project and secure an equity stake were her responsibility. The total project cost was eleven billion dollars, so 25% equity would mathematically equal 2.75 billion dollars. However, that calculation only applied to internal Russian companies. When dealing with external firms like Chevron, a premium was naturally added. The fact that the premium was less than 10% meant Samantha had negotiated exceptionally well.
Even so, Samantha’s expression was not bright.
“I’m not sure if the board will approve it.”
It wasn’t just Samantha—everyone seated here held largely negative thoughts. Three billion dollars was no small sum. Chevron was not a company that struggled because it lacked three billion dollars. But it was even less a company that threw money away for no reason. Even though Tiffany was part of the royal family, executing three billion dollars still required board approval.
“You don’t need to worry about that.”
In contrast, Tiffany was full of confidence. She could already predict exactly what the old board members would say in opposition. Their argument was obvious: since it was an inland oil field that couldn’t float tankers, the best option was to sell to a Russian oil company. But Tiffany saw it differently. The excellence of the Irkutsk field—which could produce one million barrels per day for a hundred years—was something she was tired of repeating. There were major energy-importing countries: China, Korea, and Japan. China, in particular, was like a black hole for energy resources. Russia’s East Siberia-Pacific Pipeline project even had a separate route that ran directly to China.
Simply supplying the crude produced from Irkutsk to China in a stable manner would allow them to dominate the Chinese energy market with ease. Considering the scale of profits that could be gained, an additional investment of three billion dollars was nothing. The board might flinch at the word “Russia,” and they would probably panic even more at the mention of “China,” but Tiffany had absolute certainty. Her expression was so confident that the others in the Strategic Planning Office felt reassured.
What was interesting was that the basis of Tiffany’s confidence did not come from highly calculated data or anything of the sort.
Those were the words Yoo Jae-won had said just a few days earlier. At a time when many Wall Street economists were downgrading China’s growth rate by two or three percent each year because of the Qing Dynasty bonds, Tiffany had found it hard to believe at first. But the data she examined herself told a different story. Even while carrying the penalty of repaying the Qing Dynasty bonds, China was a monstrous country that consistently achieved over 5% growth every year. Moreover, the Chinese leadership had concluded last year that they needed to proactively stimulate the economy at the national level in order to accelerate repayment of the Qing bonds. As a result, they were increasing government spending and easing loan regulations—quantitative easing measures that had so far been successful. Although there had been concerns about inflation, cities that had opened earlier, such as Shanghai and Guangzhou, saw active investment. Large-scale civil engineering projects were underway across entire cities, and new skyscrapers seemed to rise every time you blinked, changing the urban landscape daily. They were also actively encouraging exports and showering preferential treatment on foreign companies and capital that wanted to invest in or build factories in China. It was like robbing Peter to pay Paul, yet it was working surprisingly well.
“Alright, let’s put together the business plan as it stands. If there are any shortcomings, we’ll commission external consulting to supplement them.”
Tiffany immediately began preparing for a showdown with the board.
A few weeks later.
The headquarters of ID Technology, located south of Silicon Valley, was unusually lively. The MT for the first graduating class of Deokjin Technical University interns had just ended. During the nearly month-long MT period, the Deokjin Technical University graduates had spent a great deal of time learning ID Group’s corporate culture. In parallel, aptitude tests had been conducted to assign them to departments for their one-year internship. Nothing was done haphazardly. First, during the MT, the Deokjin graduates were asked to write down which ID Group affiliate they wanted to work for. The primary consideration in work assignment was the department each person had applied for. The problem was that popular departments and unpopular ones had wildly different numbers of applicants, and the aptitude test was used to distribute them evenly. It wasn’t an internal test but one created by an external firm specializing in talent development. It wasn’t perfect, but it provided sufficient data to use as a standard.
Even after that classification, those left over went through what was called “the spin”—a random draw. Surprisingly, quite a few people ended up in the spin. It seemed people had crowded toward the more well-known departments. Roughly one-third, about eighty people, went through the spin before the classification was finally complete. And so today, the Deokjin Technical University graduates who were ID Group’s first internship participants all moved to their assigned positions. Some who were going very far received assignments in Manhattan, New York.
“Hyung! You have to come see me when you’re on vacation!”
“Yeah, I’ll definitely go to New York!”
Hong Bum-soo waved at the young man disappearing like a nephew and watched him with envious eyes. The lucky fellow had been assigned to the ID Investment headquarters. And he was the one who had been closest to Hong Bum-soo during college. ID Investment. It was a firm that stood alongside global leaders like Goldman Sachs and JP Morgan Chase. Although smaller in scale, it boasted an undefeated legend with zero investment failures since its founding. Its presence in Korea was especially remarkable. Any middle-class person in Korea who had achieved a degree of economic stability would typically have at least one ID Investment fund account. That made sense. After the foreign exchange crisis passed and the economy stabilized, interest rates in Korea had quickly normalized. First-tier banks offering over 10% compound interest had virtually disappeared. Savings accounts now offered a meager 4%, at most 5%. In contrast, even ID Investment’s most stable products boasted returns in the 20-30% range.
Why a computer engineering graduate—a typical “engineering nerd”—was needed at ID Investment, Hong Bum-soo didn’t know. But four interns, including the friend he had been closest to, had been selected. He had no idea what kind of work they would do, but just the fact that their workplace was Manhattan, New York, drew envy from their peers. Hong Bum-soo felt the same. Especially since his own assignment only said “ID Group,” which made it even more mysterious. When he first received the notice via ID Talk, he had been confused and asked a nearby employee, but all he got was “just wait and see.” After all, ID Group was a global corporation with hundreds of thousands of direct employees. How enormous an organization was it that they would give such a vague notice as simply “ID Group”? There were countless possible workplaces—Seattle, Dallas, and so on—yet the notice was so blunt. For reference, the place Hong Bum-soo had applied for with highest priority was Nextcom. Although he had spectacularly failed after turning Naver into a corporate venture from Ilsung SDS back in Korea, he still had ideas he hadn’t been able to try yet. The problem was that Nextcom was also one of the most popular choices among the interns. Among the fresh-faced interns, there were many more suitable candidates than Hong Bum-soo. Moreover, he thought his unusually older age had probably worked against him.
Anyway, as everyone else headed off to their assigned paths, Hong Bum-soo, left alone, was about to look for the staff member who had supervised the intern MT.
“Mr. Hong Bum-soo?”
Before the anxious Hong Bum-soo could take a single step, a voice called his name first. He turned his head, wondering who it was, and his mouth fell open. The person who had called his name was none other than Chief of Staff Kim Dae-seok.