This week Fortune Magazine will release its list of the 500 largest corporations in the world. Replacing GeneralMotors at the top of the list is Exxon Mobil, which merged in 1999 to form the largest oil corporation since thebreak-up of the Standard Oil Monopoly at the turn of the century. Exxon’s profits in the year 2000 were astaggering $17.7 billion, a 124% increase over the year before the merger.

Exxon Mobil operations now span the entire globe. This weekend Exxon Mobil announced that it would spend $1.7 billionon three oil and gas projects in Malaysia, where it is the largest oil producer. In Indonesia, where Exxon Mobil isthe largest producer of both oil and natural gas, the company said it plans to resume production soon in Aceh, wherethe Indonesian military has killed more than 1,000 people this year in a brutal counterinsurgency war focused in parton protecting the company’s operations.

But the real hunt is in the countries of the Caspian Sea region, including Azerbaijan and Kazakhstan, where theworld’s largest remaining reserves of untapped oil and natural gas are located, and which has become a focal point ofU.S. foreign policy.

Exxon and Mobil were major players in the Caspian Sea region before their merger, and became the dominant company inthe region after they joined. In 1996 Mobil signed an agreement with the government of Kazakhstan for a share of thefabulously wealthy Tenzig oil field.

But an internal inquiry conducted by the Mobil Corporation before its merger with Exxon in 1999 found that thecompany paid more than a billion dollars to foreign companies in connection with arrangements in Russia andKazakhstan that had no apparent business purpose. The payments, however, may have been related to a plan forKazakhstan to swap oil with Iran, with Mobil helping to foot the bill in violation of U.S. law.

It’s a complicated story involving former Russian Prime Minister Victor Chernomyrdin, business intermediaries fromhalf a dozen countries, and the worlds largest oil company. Its a story that reveals a lot about how the modern oilindustry works, and the lengths to which oil corporations will go to gain a stake in countries where corruption andback room deals grease the skids.

Guest:

• Seymour Hersh, one of the nations leading investigative journalists. Hersch won the Pulitzer Prize forexposing the My Lai (MEE- LAI) massacre during the Vietnam War. He is the author of ??The Price of Power, abiography of Henry Kissinger, and ??The Dark Side of Camelot, an expose of the Kennedy Administration.

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