By the OGJ Online Staff
HOUSTON, Feb. 16�Tyumen Oil Co., one of Russia's largest four oil companies, has been fully privatized, a step the company said would improve its ability to grow and attract investment.
Based on the terms of a December 1999 privatization auction, government-set investment requirements totaling $185 million were met.
The Russian Federal Property Fund this week certified Tyumen had spent the $185 million on two oil projects and transferred the government's 49.8% shareholding to Tyumen private owners.
"The completion of our privatization helps advance Tyumen Oil into the leagues of world-class companies," said CFO Joseph Bakaleinik. "This milestone will allow us to consolidate our subsidiaries, increase transparency and take other steps to prepare for entry into international capital markets."
New Priorities, a company formed by Tyumen's shareholders, won a privatization auction for the government's 49.85% stake on Dec. 22, 1999. In addition to a base payment, the government required New Priorities to invest $185 million in the company, which was spent on a first stage of modernization of the company's principal oil refinery, at Ryazan, Russia, and rehabilitation of oil wells and pipelines in giant Samotlor oil field in Western Siberia. Tyumen is also investing additional funds in those projects.
Tyumen said among the more immediate effects of its privatization is that it facilitates the merger of the company's subsidiaries. Shareholders of four crude oil production subsidiaries were voting whether to reorganize by exchanging stock with that of Tyumen Oil, their parent company.
Tyumen, established in 1995 and owned by the Russian Alfa Group and US-Russian Access/Renova, has crude oil reserves of more than 8.2 billion bbl and refines more than 660,000 b/d. It ranks No. 2 in reserves and No. 4 in production among Russian oil companies.