Russia's Tyumen Oil Co. and BP Amoco PLC have apparently resolved a dispute over ownership of a Russian oil firm, thus scuttling US government opposition to loans backing use of US technology in two major Russian projects.
Tyumen Oil (TNK) has secured production licenses previously held by its Kondpetroleum and Chernogornefte- gaz units and plans to return both the Chernogorneft license and the related unit itself to Sidanko, in which BP Amoco PLC holds a stake.
The tentative agreement between TNK and BP Amoco-which, among other things, allows for cooperation in the rehabilitation of Siberia's supergiant Samotlor oil field-seems to have encouraged the US Department of State to drop its opposition to key US Export-Import Bank loans related to projects in Russia.
TNK seized both production companies from insolvent oil company Sidanko in hotly contested bankruptcy auctions last year. Sidanko shareholder BP Amoco, which angrily fought the controversial sales, later accepted the results after TNK agreed in December to return Chernogorneft to Sidanko in exchange for a 25%-plus-one-share blocking stake in Sidanko. (TNK paid $170 million for Chernogorneftegaz.)
Deal details
Reuters quoted Joseph Bakaleynik, TNK first vice-president and chief financial officer, as saying, "There are nitty-gritty details to be worked out. I think, within a month or 2, it should be signed."
The general idea had been agreed in December, he said, referring to the Chernogorneft handover.
BP Amoco's Ralph Alexander said last week that a final deal can be expected in 2-3 weeks. Sidanko reportedly will be managed by BP Amoco following the deal.
"Acquisition of the license by TNK-Nizhnevartovsk was a necessary step in the regulation of the situation around Chernogorneft," TNK Pres. Simon Kukes said. "It creates a good backdrop to continue our talks with BP Amoco and other Sidanko shareholders."
Chernogorneft was the jewel in Sidanko's crown, and its output accounted for about half of the company's total oil production. In 1999, Chernogorneft produced 6.3 million tonnes of oil from its estimated reserves of 287 million tonnes.
Kondpetroleum, with reserves of 823.8 million tonnes of oil, produced 2.5 million tonnes last year.
Sidanko status
Bankruptcy proceedings against Sidanko ended recently when a Moscow arbitration court approved an out-of-court settlement with its creditors. Sidanko's financial condition improved during the period of external management. The company has accumulated $40 million to settle with creditors.
Under the terms of the deal, Sidanko will repay at least 50% of all registered debts within 3 months following the date the court approves the settlement. All remaining debts must be repaid within 9 months.
Repayment of debts owed to a syndicate of foreign banks headed by Germany's Dresdner Bank AG will be rescheduled over a 3-year period. Debts to Sidanko shareholders will be rescheduled over a 5-year period.
Sidanko payables total $461.9 million, including debts of $153.6 million to Dresdner Bank, $132 million to shareholders (consisting of $73.9 million to ICFI, $30.8 million to Vitra, $24.2 million to BP Amoco, and $3.1 million to Sputnik), and $40 million to MFK. The company owes tax debts totaling $34.9 million, and debts to subsidiaries total $64 million, including $35.8 million owed Chernogorneft.
Alexander said that money left over following payment of debts will be distributed to Chernogorneftegaz shareholders.
US drops opposition to loans
TNK's apparent willingness to return the license and the company to Sidanko, allowing BP Amoco to recoup its investment, may have caused the US state department to lift its objections to two Ex-Im Bank loan guarantees supporting Russian projects incorporating US petroleum technology-one to upgrade a refinery, the other to boost output in an oil field. The $498 million in loans were blocked in December after TNK acquired Cherno- gorneft at the expense of BP Amoco, a move widely regarded as a devaluation of foreign investment.
At that time, US Sec. of State Madeleine Albright asked the bank not to approve the loan, explaining it was not in the US national interest. The state department has legal authority to block Ex-Im Bank loans but seldom uses it.
On Mar. 31, the state department confirmed it had dropped its opposition to the loans. Spokesman James Foley said the department had been concerned about the rights of foreign investors in Russia's oil sector but added, "We have been able to clarify a number of concerns to our satisfaction." He also noted the Russian government has completed plans to sell its 49% share of TNK to private investors.
TNK plans to use the loans to upgrade the Ryazan refinery near Moscow and to rehabilitate giant Samotlor field in Western Siberia. The Ex-Im Bank was due to reconsider the loan at an Apr. 6 meeting.
ABB Lummus Global will use $198 million in Ex-Im loan guarantees, plus another $70 million in syndicated loans from private banks, to modernize Ryazan, which TNK notes is located near the Moscow gasoline market. The company will upgrade the refinery to reach an 80% conversion rate of oil to light products. TNK plans to use the refinery's increased output to capture 20% of Moscow's gasoline market.
Halliburton Co. will use $292 million in Ex-Im loan guarantees plus another $140 million in syndicated bank loans to help rehabilitate Samotlor field. BP Amoco will provide technical assistance to develop the field. TNK holds part of the license, and Sidanko holds the remainder.
Kukes said, "These loan guarantees will create thousands of jobs in the US and Russia and enable significant cooperation with Western partners on technical and managerial levels. These projects will also help integrate Russia even further into the world economy."
Tyumen Oil Co.'s Simon Kukes
"These loan guarantees will create thousands of jobs in the US and Russia and enable significant cooperation with Western partners on technical and managerial levels. These projects will also help integrate Russia even further into the world economy."
