Sibneft, TNK affiliate wins stake in Slavneft with $1.86 billion bid

By OGJ editors
HOUSTON, Dec. 20 -- Invest-Oil—an affiliate company acting in the interest of Russian oil firms Siberian Oil Co. (Sibneft) and Tyumen Oil Co. (TNK)—Wednesday bid for and won a 74.95% equity stake in OAO Slavneft for $1.86 billion. Slavneft is Russia's ninth largest oil producer, the companies said in a joint statement.

TNK and Sibneft were among three bidders for the stake in Slavneft. The third firm, Chinese state oil firm Chinese National Petroleum Corp. (CNPC), was allegedly "shut out" of the bidding process by Russia's Duma, which had fought earlier in the week to pass a declaration urging the Cabinet to prevent any foreign oil company from winning the auction, the Moscow Times reported Monday. "Specifically, lawmakers said companies in which a foreign government has more than a 25% stake should be declared ineligible to bid," the Times reported Russian news agency Interfax as saying.

The Federal Property Fund, which conducted the auction, had set a minimum price of $1.7 billion for the nearly 75% interest in Slavneft, said Tyler Dann, Banc of America Securities LLC analyst, in a Nov. 20 research note. "Strong interest from several Russian bidders could drive the price higher," Dann noted, adding, "Slavneft is one of two remaining state-owned oil companies and accounts for roughly 5% of total Russian production. Questionable asset sales prior to the launch have left many foreigners wondering if the government is showing signs of progress or conducting business the old-fashioned way."

Interfax Thursday reported that Russia's Antitrust Ministry had laid out conditions for "preserving competition" for Intervest-Oil. "A ministry press release reports that lack of compliance would be the basis for annulling Invest-Oil's recent acquisition of the Russian government stake in Slavneft," Interfax said.

Interfax also reported TNK Vice-Pres. Oleg Surkov as saying that either TNK or Sibneft—but not both firms—would hold the Slavneft shares. "Slavneft's performance will not be affected, whichever company does hold the shares," Surkov told the news agency.

Current Slavneft management will continue to run the company, Interfax reported Sibneft Pres. Yevgeny Shvidler as saying. "Sibneft and TNK at an extraordinary shareholders' meeting will put forward their representatives for the board of directors," he added.

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