Russia » Economics
Author`s name Ольга Савка

New takeover to make Russia's giant Gazprom one of world's largest oil and gas corporations

Experts differ in their opinion about the recent deal, when Gazprom paid $13 billion for the oil company Sibneft

The deal conducted by Russia's gas giant Gazprom to acquire oil company Sibneft has already won the reputation as “the largest deal in present-day Russia.” Indeed, the transaction has become one of the most important events of 2005. The acquisition may help Gazprom become another Russian company to run for the title of a world-class oil and gas corporation. Experts, however, differ in their opinions about the consequences of the deal.

It is worth mentioning that Deutsche Bank recommended Gazprom to analyze a possibility to purchase the company Yuganskneftegaz and then Sibneft and Surgutneftegaz. The Gazprom administration apparently paid a lot of attention to the suggestion especially when plans to takeover another oil giant, Rosneft, failed to come true.

Negotiations about Gazprom to purchase Sibneft took place in the summer of the current year, and the deal was finally completed two days ago. Gazprom, the world's largest natural gas monopoly and the ninth biggest Russian oil-maker, signed adequate documents to acquire 72.663 percent of Sibneft's shares on Wednesday. The deal is evaluated at $13,091 billion. As a result, Gazprom controls 75.679 percent of Sibneft's shares taking into consideration a previous acquisition of the oil company's shares too (3.016 percent), Interfax says.

Gazprom's management is quite optimistic in its comments about the future. Deputy chairman of the company's administration, Alexander Medvedev, said that Gazprom would become one of the largest energy companies in the world dealing with oil, oil processing and petrochemistry.

However, the Minister for Economic Development and Trade Gherman Gref set out his doubts about the Gazprom-Sibneft deal. “I do not think that it was a rational way to invest Gazprom's funds in oil assets,” the minister said.

”This question requires profound analysis, - Andrey Dementyev, an expert with the Institute of modern economic research ICER says. -  If one tries to look into the matter and see where Gazprom took this money for the deal, one can see that everything is rather complicated and most likely ineffective,” said the expert.

Other experts believe, however, that Gazprom will be able to extend its presence on the market of oil with its new acquisition, although Sibneft is far from being a perfect asset. Sibneft's profits dropped from $2.4 billion in 2003 to $2 billion in 2004. In addition, there are certain risks connected with Sibneft's own assets too. The company Sibir Energy, for example, is currently in dispute with Sibneft because of licenses to develop oil-rich deposits in one of Russia's northern regions. Henry Kameron, the General Director of Sibir Energy, said that his company was going to continue taking the legal action against Sibneft despite possible changes in the structure of its shareholders.

The Gazprom-Sibneft deal has raised doubts about its fairness. The takeover of Sibneft is an example of a transparent market deal from the market point of view. However, Sibneft was originally acquired by structures close to oligarchs Boris Berezovsky and Roman Abramovich. The control shareholding of the company was sold for some $100 million, which is almost 100 times as less as the price that has been recently paid for the same shareholding.

On the photo: the building of Gazprom in Moscow