This makes a great deal of sense:
"The state is continuing its drive to control the oil sector
and its strategic development," said Caius R. Rapanu, senior
energy analyst at Nikoil Capital Market Research in Moscow.
This makes one wonder what's up:
The sale will be almost completely financed with a loan of $12
billion from a consortium of Western banks.
rkm
--------------------------------------------------------
http://www.washingtonpost.com/wp-dyn/content/article/2005/09/28/AR2005092801195.html
washingtonpost.com
Russian Giant Expands Control of Oil
By Peter Finn
Washington Post Foreign Service
Thursday, September 29, 2005; D06
MOSCOW, Sept. 28 -- The state-controlled Russian energy
company Gazprom agreed Wednesday to purchase a majority stake
in privately owned Sibneft for $13.01 billion, the largest
corporate deal in Russia's history and one that will tighten
the state's grip on the country's booming energy sector.
Gazprom, formed from assets of the Soviet natural gas
ministry, will acquire 72.66 percent of Sibneft's shares. The
sale will be almost completely financed with a loan of $12
billion from a consortium of Western banks.
Gazprom will buy the shares from a holding company controlled
by Roman Abramovich, a Russian billionaire who has close
relations with the Kremlin.
Sibneft, Russia's fifth-largest oil producer, pumps about
900,000 barrels a day. The company emerged from the sale of
state assets to private investors after the collapse of the
Soviet Union, a policy that was unpopular here and is being
reversed by President Vladimir Putin.
"The state is continuing its drive to control the oil sector
and its strategic development," said Caius R. Rapanu, senior
energy analyst at Nikoil Capital Market Research in Moscow.
Gazprom earlier bought 3 percent of Sibneft through its
banking arm, and because it will now own more than 75 percent
of the company, Russian law will allow it to exercise complete
control over its decisions.
"The businesses of Gazprom and Sibneft have a defined synergy.
This will make Gazprom more effective both in Russia and on
the world oil and gas markets," Alexei Miller, chief executive
of Gazprom, the world's largest producer of natural gas, said
in a press release. "We are consistent in achieving our
strategy goal of diversifying our business and turning Gazprom
into a world-class, global energy company. Oil is now a core
aspect of Gazprom's business."
Miller has said in the past that he intends to make Gazprom
one of the world's great energy companies, rivaling Western
giants such as Exxon Mobil Corp., BP PLC, and Royal Dutch
Shell PLC. Thirty percent of Russia's oil production is now
directly controlled by the state, which also exercises great
influence on those assets it does not formally control.
Industry analysts noted that the purchase price works out to
about $3.30 per barrel of reserves, a cut-rate price compared
with other large oil deals. But the acquisition included a
political calculation on Abramovich's part, some analysts
said.
"If this had gone to an open international tender, it could
have gone for twice as much," said William F. Browder, chief
executive of Hermitage Capital Management in Moscow. "But
given the provenance of these assets, he was probably happy to
take $13 billion off the table. Look at the other major oil
guy who tried to sell a strategic asset. Thirteen billion
dollars is better than zero."
Browder was referring to Mikhail Khodorkovsky, the former head
of the oil company Yukos who is serving an eight-year prison
sentence for tax evasion and fraud in what his supporters call
a politically motivated prosecution for his perceived
political activities against the Kremlin.
Khodorkovsky had explored a merger with a Western oil giant
before his arrest.
Last year, the Russian government broke up Yukos to settle
what it called back taxes. In December, the state-owned oil
company Rosneft acquired Yukos's prize asset, the
Yuganskneftegaz oil fields, which pump about 1 million barrels
of oil a day. The sale was criticized by Yukos's management as
state-sanctioned theft.
"The reason Abramovich wanted to sell is that he didn't want
to be subject to the arbitrary whim of the Russian
government," Browder said.
Abramovich, the governor of Chukotka in Russia's remote Far
East, has remained on good terms with the Kremlin, unlike many
of his counterparts who made fortunes in the 1990s.
He is best known in Europe for his control of the Chelsea soccer
club in London. He has put hundreds of millions of dollars into
the team to obtain some of the world's best players. That invest-
ment paid off this year when Chelsea won the 2004-05 Premie-
rship league title.
© 2005 The Washington Post Company
--
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