For whom will the Russian oligarchs chip in?
A fateful day will soon come when Slavneft, which is still a state-run company, is to be sold by auction. Russian Prime Minister Mikhail Kasyanov promised to sell this oil company no later than December 20. Originally, the government planned to privatize only 19.68% of the company’s shares. However, when at the end of the summer, it was perfectly evident that the country couldn’t make the peak payments of its foreign debt, the government admitted that it would have to sell the whole state share of the company. The minimal sum of the deal is fixed at the rate of 1.3 billion dollars. However, experts are sure that under conditions of severe competition, which is highly likely to be around this tasty morsel (Slavneft is meant), the oil company can be sold for 2 or even 3 billion dollars. Russian oil companies Surgutneftegas and Sibneft have already appealed to the RF Ministry for the Anti-Monopoly Policy for a permit to buy 74.95% of Slavneft shares. At that, Sibneft set up an affiliated company, Fin-Trade, especially for participation in the auction; the new company officially received 1.7 billion dollars from Sibneft at that.
Quite unexpectedly, the Belarus government remembered that it hold a small Sibneft share holding as well (oil integration between Russia and Belarus is performed at the expense of this share holding). Moreover, on the eve of this privatization deal, Russian oligarchs began making some mutual loans and large-scale currency exchanges, which by the way may seem strange at first glance. It may seem that it’s going to be even a bigger deal, not a mere privatization of the state oil company.
What is very interesting about the deal is that even when the whole of the Russian share holding of Slavneft is sold, the oil company won’t be completely private all the same. The government of former Soviet republic of Belarus holds 10.83% of Slavneft’s shares. And Belarus, which never dared to interfere into the company’s affairs before, strongly recommends the Russian government not to sell the whole of the Slavneft. Belarus officials support this opinion with the argument of “intergovernmental integration.” And the Russian government ignored this recommendation. In Belarus, Slavneft is currently actively working on the reconstruction of the Mozyrsky oil refinery and on the development of a network of filling stations in the republic. It is not ruled out that new private leadership of the oil company may consider the projects unprofitable. And officials in Belarus are apprehensive that this may ruin the plans on creation of a Russia-Belarus union state.
According to the Slavneft press-service, the company says that the Belarus market will remain attractive and perspective for it under any possible conditions. It is not ruled out that new owners of the oil company will cynically suggest that the Belarus Ministry of Property to sell its shares of Slavneft.
Experts say that the Belarussian shares of Slavneft are valued at 100-140 million dollars approximately. And it may turn out that today’s demarche of the Belarus shareholders is merely designed with a view to bid up the cost of the Belarus-owned shares. To tell the truth, the government of the former Soviet republic needs this money, as it recently agreed that new tariffs on Gasprom gas supplies will be introduced in the republic.
It is not clear yet who is the probable winner of the auction. And this is despite the popular opinion that Russia’s Sibneft oil company controlled by Roman Abramovich, called “the chief cashier of Yeltsin’s Family,” has every chance to win the auction.
According to Russia’s newspaper Vremya Novostei, Russian company Rosneft is also seriously considering the possibility of its participation in the auction. It is very likely that it will make up an alliance with Gasprom and Mezhprombank for this purpose. It is already named BMP, by the initial letters of the names of the presidents of the three prospective participants of the alliance. It is going to be an obviously stronger company.
It is also known that the Tyumen Oil Company (TNK) is going to take part in the auction for Slavneft sale. Analysts say that with a view to conclude this deal, TNK has recently issued eurobonds to the sum of 400 million dollars. Moreover, it is said that it may soon make an alliance with Sibneft, which will leave just few alternatives in the privatization auction. However, both companies mentioned nothing about their possible alliance yet.
LUKOIL is one more possible participant of the auction, but the company itself hasn’t declared yet its ultimate decision concerning privatization of Slavneft. The LUKOIL leadership declared its intention to participate, but no official application has been yet handed over to the RF Ministry of Anti-Monopoly Policy.
Meanwhile, Sibneft isn’t even trying to conceal its intention to gain control over Slavneft at any price. In November, the company won guarantees for Western credits to the sum of 675 million dollars. Besides, Sibneft (together with TNK) has already bought up all shares of Slavneft and its affiliated companies (Slavneft-Megionneftegas and Slavneft-Yaroslavnefteorgsintez) which are not owned by the government. There is information saying that shareholders of Russian oil company Yukos headed by oligarch Mikhail Khodorkovsky, are ready to grant 1 billion dollars to Sibneft for purchase of Slavneft at the auction. And this fact obviously changes the whole alignment of forces about the last stage of the Russian large privatization deal.
Until now, Yukos acted in coordination with another oil giant, LUKOIL; experts mention this coordination on the domestic, as well on the foreign markets. It is not ruled out that these special relations are the reason why LUKOIL president Vagit Alekperov is hesitating about Slavneft privatization. What is more astonishing, it seems that veterans of the Russian oligarchy are ready to chip in and let Roman Abramovich have the morsel bit, the Slavneft oil company. And the latter, in his turn, is obviously acting in the interests of some third person (or several people). And other oligarchs, directly or indirectly connected with Russia’s northern capital, St. Petersburg, are ordered to interfere with the affairs of the veteran oligarchs.
In other words, the rivalry between Yeltsin’s and Putin’s economic elites seems to be entering its climax. The next presidential election and Russia’s future mostly depend upon which elite wins the auction.
Dmitry Slobodanuk PRAVDA.Ru
Translated by Maria Gousseva
Read the original in Russian: http://economics.pravda.ru/economics/2002/7/21/62/2904_Slavneft.html
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