RUSSIA: BIGGEST PRIVATISATION OF THE YEAR RESULTS IN TWO OF THE COUNTRY'S BIGGEST OIL COMPANIES JOINING FORCES TO BUY ANOTHER
Record ID:
648217
RUSSIA: BIGGEST PRIVATISATION OF THE YEAR RESULTS IN TWO OF THE COUNTRY'S BIGGEST OIL COMPANIES JOINING FORCES TO BUY ANOTHER
- Title: RUSSIA: BIGGEST PRIVATISATION OF THE YEAR RESULTS IN TWO OF THE COUNTRY'S BIGGEST OIL COMPANIES JOINING FORCES TO BUY ANOTHER
- Date: 19th December 2002
- Summary: (EU) MOSCOW, RUSSIA (DECEMBER 18, 2002) (REUTERS) 1. SLV EXTERIOR OF RUSSIA'S PROPERTY FUND BUILDING 0.06 2. MV PEOPLE REGISTERING BEFORE AUCTION 0.13 3. MV PEOPLE INSIDE 0.18 4. MV PARTICIPANTS WALKING INTO AUCTION HALL 0.29 5. SLV AUCTION ORGANISERS ENTERING NEWS CONFERENCE ROOM; MV MEDIA 0.46 6. (SOUNDBITE)(Russian) VLADIMIR MALIN, HEAD OF RUSSIA'S FEDERAL PROPERTY FUND, SAYING "We think there were no violations of the law at the auction, there were some off shore companies there, so it was difficult to determine the benificiary." 0.53 7. MV MEDIA; SLV NEWS CONFERENCE 1.00 8. (SOUNDBITE)(Russian) NIKOLAI BORISENKO, ROSNEFT VICE-PRESIDENT, SAYING "We had presented all the documents according to the auction demands. There should not be any complaints, we have done everything according to the law and our lawyers consulted us, so there were no reasons for Russia's Federal Property Fund to take stop us from taking part in the auction." 1.33 9. MV PEOPLE IN THE CORRIDOR 1.41 10. (SOUNDBITE)(Russian) IGNATOV, A RUSSIAN AUDIT COMMISSION SPECIALIST, SAYING "We did not stop the audit of Slavneft company, the State had the majority stake for 2002, and profit will move to the 2003 budget and, also, we will see how the income from this auction comes to the budget." 2.06 11. SLV SLAVNEFT HEADQUARTERS BUILDING IN MOSCOW (3 SHOTS) 2.22 (EU) SIBERIA, RUSSIA (FILE) (REUTERS) 13. SLV OIL WELLS; AERIAL OF OIL FIELD (5 SHOTS) 3.04 Initials Script is copyright Reuters Limited. All rights reserved
- Embargoed: 3rd January 2003 12:00
- Keywords:
- Location: MOSCOW AND SIBERIA, RUSSIA
- Country: Russia
- Reuters ID: LVACBQ3RWV1W5YG51WWO37HLNLN5
- Story Text: Russia's biggest privatisation of the year has resulted
in two of the country's biggest oil companies joining forces
to buy up another Russian oil firm.
Two of Russia's biggest oil firms, Sibneft and TNK, on
Wednesday (December 18, 2002), paid $1.86 billion U.S. dollars for
the control of another oil company, Slavneft.
But the auction for Slavneft was clouded by concerns over
the way the two companies won it and another Russian state oil
firm, Rosneft, piqued at being barred from the bidding, said
it would challenge the outcome in court.
"We have presented all the documents according to the
auction demands. There should not be any complaints. We have
done everything according to the law and our lawyers consulted
us, so there were no reasons for Russia's federal property
fund to take stop us from taking part in the auction," said
Rosneft vice-president Nikolai Borisekno after the auction.
The state said that it would change the rules for future
auctions to make clear who was bidding.
The only foreign company to get even close to bidding was
the state-run China National Petroleum Corp, but it pulled out
at the last minute amid market talk it was effectively shut
out.
Even though the way the auction was won left a sour taste
for the government, which had touted it as a model of openness
after a history of murky privatisation deals, it gives a very
helpful boost to its debt-strapped coffers.
But analysts said it was a good deal for Sibneft and TNK,
which paid a reasonable price for 75 per cent of Slavneft by
keeping competition at bay.
They said the deal could be a step towards a mega-merger
of the three companies. TNK ranks fourth, Sibneft fifth and
Slavneft ninth in Russia's oil industry, which itself is the
world's second largest after Saudi Arabia.
Sibneft in particular is keen to join the top players in
Russia's oil business and desperately wants Slavneft's
refineries and access to its oil fields in Siberia. TNK too
wants to increase the ability to refine more of its own oil.
The ambitious and fast-growing Sibneft initially appeared
to be the sole winner via an unknown Cyprus-based firm Invest
Oil.
But later, TNK announced that it was joint owner with
Sibneft of Invest Oil and would go 50-50 in the new purchase.
Sibneft's share price initially surged five per cent, as
investors considered the price a bargain for Russia's
ambitious number five oil firm, but fell as details emerged.
By late afternoon trading, Sibneft shares were down 0.47
per cent at $2.11.
Of the seven bidders in the auction, six were believed to
have been affiliated to Sibneft or TNK or both. The seventh
was not identified.
But the state property fund, disappointed the price was
barely above a floor of $1.7 billion, called the auction
legal.
"Of course, we do not welcome or support secret deals, but
we think there were no violations of the law at the auction,"
said Vladimir Malin, head of Russia's Federal Property Fund.
However, Malin said the fund would change rules to ban
unknown companies with unknown offshore shareholders from
participation in future auctions.
Proceeds from the sale will help the government pay a
hefty $17 billion foreign debt bill next year.
Sibneft's success in the auction confirms its position as
the country's fastest-growing oil firm, and could catapult it
to the top three Russian producers by 2005.
Slavneft, the country's ninth-largest oil firm, produces
320,000 barrels of oil per day (bpd), mainly from fields in
western Siberia. It also has refining capacity of 600,000
barrels per day, with well-placed plants in Russia and
Belarus.
Sibneft, seen as one of the driving forces behind Russia's
impressive output growth, produces 530,000 bpd from fields in
western Siberia and has said that by 2010 it expects to boost
its output to 1.0-1.2 million bpd.
TNK produces 750,000 bpd excluding medium-sized oil firm
Sidanco which it jointly owns with BP. TNK is not publicly
traded and also holds a minority stake in Slavneft.
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