RUSSIA: PLANNED SALE OF THE OIL FIRM SLAVNEFT IS BIGGEST PRIVATISATION AUCTION IN THE HISTORY OF RUSSIA
Record ID:
344852
RUSSIA: PLANNED SALE OF THE OIL FIRM SLAVNEFT IS BIGGEST PRIVATISATION AUCTION IN THE HISTORY OF RUSSIA
- Title: RUSSIA: PLANNED SALE OF THE OIL FIRM SLAVNEFT IS BIGGEST PRIVATISATION AUCTION IN THE HISTORY OF RUSSIA
- Date: 18th December 2002
- Summary: (EU) MOSCOW, RUSSIA (DECEMBER 17, 2002) (REUTERS) 1. SLV EXTERIOR OF SLAVNEFT HEADQUARTERS BUILDING (2 SHOTS) 0.13 2. MV INTERIOR OF SLAVNEFT OFFICES; MV SLAVNEFT EMPLOYEES WORKING IN OFFICE; SCU MALE EMPLOYEE SITTING AT COMPUTER; SCU COMPUTER SCREEN; MV WOMAN AT DESK (4 SHOTS) 0.37 3. MV CHRIS WEAFER, CHIEF STRATEGIST AT RUSSIA'S ALFA BANK WALKING ALONG CORRIDOR AT BANK'S HEADQUARTERS 0.51 4. (SOUNDBITE) (English) CHRIS WEAFER SAYING "Slavneft (sale) is important ot the government for two reasons: One, it is likely to attract a high price and give increase of budget revenues from oil in2003. The fact is that the government would like to get at least two billion U.S. dollars from its sale and will put them (the government) into a much stronger financial position in 2003. Secondly, it is important because it confirms the continuation of the restructuring of Russian industry; the government still owns a lot of assets both in the oil and other commodity sectors and other areas. They have committed to restructuring industry, and selling the assets such as Slavneft is part of this process and confirms that they are continuing to follow the strategy which they declared." 1.35 5. SCU DOCUMENT 1.39 6. (SOUNDBITE) (English) CHRIS WEAFER, CHIEF STRATEGIST AT RUSSIA'S ALFA BANK, SAYING "People are still wary of getting involved in an auction in Russia in contest for Russian assets; so in order to overcome this the government will have had to do to make this extreme action of being transparent and having this auction conducted in a very public way where everything will be conducted in very transparent way and eventually the final bidder will be the one who pays the highest price." 2.07 7. SCU SLAVNEFT PRIVATISATION PAPERS (3 SHOTS) 2.25 (EU) SIBERIA, RUSSIA (FILE) (REUTERS) 8. AERIAL SHOT OF OIL FIELD SITE; OIL FIELD SITE WITH WORKING OIL WELLS; GAS BURNING; SLV OIL REFINERY (6 SHOTS) 3.12 Initials Script is copyright Reuters Limited. All rights reserved
- Embargoed: 2nd January 2003 12:00
- Keywords:
- Location: MOSCOW, RUSSIA
- Country: Russia
- Reuters ID: LVA7A072HPBTFTM8FMU95GFXFEZK
- Story Text: Russia is set to hold the biggest privatisation auction
in the history of the country with the sale of the oil firm
Slavneft.
The planned sale by auction is part of the Russian
government's commitment to structural reforms of the economy
and an attempt to show the outside world that it can sell
state assets in an open and transparent way, analysts said.
Slavneft is Russia's ninth largest oil firm and
produces 320,000 barrels per day mainly in western Siberia. It
has refining capacity of 600,000 barrels per day, with plants
in Russia and Belarus.
On Tuesday (December 17, 2002), China's largest oil firm CNPC
pulled out of the bidding for Slavneft, all but guaranteeing
local private firm Sibneft will win Wednesday's (December 18)
auction.
But analysts said the loss of a key bidder would make it
all the more difficult for the government, which needs to
service a record $17-billion foreign debt next year, to get
much more than its $1.7 billion starting price for Slavneft.
Sibneft is anxious to get its hands on Slavneft to help
push itself into the top ranks of Russian oil companies.
Sibneft is already Russia's fastest growing oil firm and seen
as one of the main driving forces behind the country's
impressive oil output growth. It produces some 530,000 barrels
per day from fields in western Siberia.
Almost all Russian oil majors initially said they would
bid for Slavneft, and analysts had expected the final price to
exceed $2 billion to make the auction one of the most
successful Russian privatisation deals.
Most of them later dropped the idea, however, saying
competition with Sibneft, which already holds a minority stake
in Slavneft and its subsidiaries, was too tough.
The auction of Slivneft is nevertheless important for the
Russian government.
"Slavneft (sale) is important ot the government for two
reasons: One, it is likely to attract a high price and give
increase of budget revenues from oil in 2003. The fact is that
the government would like to get at least $2 billion U.S.
dollars from its sale and will put them (the government) into
a much stronger financial position in 2003.
"Secondly, it is important because it confirms the
continuation of the restructuring of Russian industry; the
government still owns a lot of assets both in the oil and
other commodity sectors and other areas. They have committed
to restructuring industry, and selling the assets such as
Slavneft is part of this process and confirms that they are
continuing to follow the strategy which they declared," said
Chris Weafer, chief economic strategist at Russia's Alfa Bank.
He also said the manner of the auction itself was an
attempt by the Russian government to show it can sell off
state assets in an open and transparent manner.
"People are still wary of getting involved in an auction
in Russia in contest for Russian assets; so in order to
overcome this the government will have had to do to make this
extreme action of being transparent and having this auction
conducted in a very public way where everything will be
conducted in very transparent way and eventually the final
bidder will be the one who pays the highest price," added
Weafer.
Sibneft said on Tuesday it kept building up a war chest
ahead of the auction by obtaining a $150 million three-year
crude-oil export backed loan arranged by Raiffeisen Group and
Landesbank Schleswig-Holstein Girozentrale.
The loan follows Sibneft's placement of a $500 million
eurobond in November 2002, which carried a 10.75 percent
coupon and a maturity date of January 2009, the longest-term
debt ever placed on international markets by a Russian
company.
Russia's government said earlier some 14 firms had applied
for permission to bid for Slavneft, including Sibneft, CNPC
and Russia's fourth largest oil firm Tyumen Oil Co (TNK).
Analysts have said TNK was too heavily indebted to be
taken seriously as Sibneft's rival for Slavneft.
Sibneft shares rose 1.99 percent to $2.05 at 14.15 (11.15
GMT) slightly outperforming the market.
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