Russia approves plan to privatize Rosneft
The Russian government has approved a plan to privatize Rosneft, its last major holding in the oil industry and the fifth largest Russian oil company.
Under the plan, the government would raise up to $1 billion by selling its 100% interest by June 30, 1998.
About 63% of the stock would be sold in several lots at cash auctions, 33% would be sold as a block to obtain a strategic investor for the company, and 4% would be sold at a deep discount to Rosneft employees.
The stock sale will be open to both foreign and domestic investors, and brisk competition is expected for control of the firm.
Meanwhile, Russia's State Property Minister Maksim Boiko said privatization brought more than 12 trillion rubles ($2 billion) to the federal budget during the first 10 months of 1997.
It plans to raise another 10 trillion rubles from privatization sales before the end of 1997 with the first tranche of the Rosneft sale, 48% of Tyumen Oil Co., 19.68% of Slavneft (a Russian-Belarusian company), and 34% of Eastern Oil Co.
Russia will sell 34% of Eastern Oil Co. (VNK) as a block to a single Russian investor and 50% piecemeal at an auction. VNK operates almost exclusively in Tomsk oblast, where it has near monopoly control of all facilities, from production to sales. It includes Tomskneft, the Achinsk refinery, the Tomsk petrochemical plant, the Tomskneftegazgeologia exploration unit, and numerous sales and distribution enterprises.
Lawsuit
A lawsuit over control of one of Rosneft's main subsidiaries, Purneftegaz, had delayed the sale. Purneftegaz has accounted for about half of Rosneft's production.Oneximbank and oil company Sidanco (controlled by the bank) had claimed Purneftegaz but said they now plan to drop the suit and bid for control of Rosneft, perhaps with Lukoil, Russia's largest oil company. A number of international oil companies also are known to be interested (OGJ, Nov. 24, 1997, p. 42).
Rosneft has not been a strong company, due to its aging refineries and crude production of only 13.1 million metric tons in 1996.
Political opposition
President Boris Yeltsin had delayed the Rosneft sale 2 weeks due to criticism about the fairness of state property sales, and concern about the lawsuit.The Communist-dominated Duma, which has been critical of the Kremlin's privatization program, has established a commission to investigate the sales of state properties Svyazinvest, Norilsk Nickel, and the Tyumen and Sibneft oil companies.
The Kremlin has been under pressure to halt further privatization sales because, critics argue, previous auctions have been tainted by sweetheart deals.
Yeltsin recently approved the privatization this year of several more state-owned enterprises, including the partial sales of oil company Lukoil and electricity monopoly Unified Energy Systems and the sale of remaining government shares in Sibneft and Tyumen oil.
Lukoil plans
Meanwhile, Lukoil wants a strategic investor to purchase the 15% of its shares the Russian government plans to sell before the end of the year.Foreign investors currently hold 42% of its common stock, and the government will retain 15%.
Copyright 1997 Oil & Gas Journal. All Rights Reserved.