Gazprom to buy controlling stake in Sibneft

Sept. 29, 2005
Russia's state-controlled OAO Gazprom plans to acquire 72.7% of oil company OAO Sibneft for $13.1 billion in a transaction that will raise Gazprom's total stake in Sibneft to 75.7%.

By OGJ editors
HOUSTON, Sept. 29 -- Russia's state-controlled OAO Gazprom plans to acquire 72.7% of oil company OAO Sibneft for $13.1 billion in a transaction that will raise Gazprom's total stake in Sibneft to 75.7%.

Gazprom is buying the interest from Roman Abramovich through his investment company, Millhouse Capital.

"The deal is being struck in accordance with current legislation," said a brief statement posted on the Gazprom web site. It added that the two sides had signed binding documents. The transaction awaits approval by Gazprom's board.

"We've been consistent in meeting the strategic challenge of diversifying our business portfolio and transforming Gazprom into a world-class energy company," said Alexey Miller, Gazprom chairman. "The oil business is a core activity of Gazprom."

Sibneft reported worldwide reserves of 2.366 billion bbl of oil and 551 tcf of natural gas for 2004. It produced 250 million bbl of oil and an estimated 49 bcf of gas during the year and had assets totaling $10.26 billion (OGJ, Sept. 19, 2005, p. 44).

Sibneft and its subsidiaries hold about 45 exploration and production licenses in the Yamal-Nenets and Khanti-Mansiisk autonomous regions of West Siberia, in the Omsk and Tomsk regions, and in Chukotka.

Four of its five largest oil fields are in the Noyabrsk area—Sugmutskoye, Sutorminskoye, Vyngapurovskoye, and Sporyshevskoye—and account for nearly half of its reserves. Its Sibneft-Yugra subsidiary holds a development license for Siberia's giant Priobskoye oil field.

Sibir Energy PLC, London, in July filed a fraud case against Sibneft in the British Virgin Islands alleging dilution of interests of Sibir subsidiary Yugraneft in Sibneft-Yugra. Sibir says Yugraneft had a joint venture agreement with Sibneft-Yugra for development of Palyanovskoye field and southern Priobskoye field and that share distributions by Sibneft in 2002 and 2003 reduced Sibir's interest in Sibneft-Yugra to less than 1% from 50%.

Sibneft also owns a 390,000-b/d refinery at Omsk and has a 38.5% share in the 200,000-b/d Moscow Oil Refinery, in which Sibir also holds an interest.