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Sunday, December 18, 2005

Sibneft Let VSK Out of Court

It will try to collect the losses from the registrar
12-16-2005 Kommersant - Yesterday, in Moscow Arbitrage Court Sibneft announced that it would demand about 11 million rubles for wrongly written off shares from the registrar. Sibneft refuse to sue insurance company, which insured registrar’s professional liability. In compliance with a ruling of Supreme Arbitrage Court Sibneft paid to its shareholder 11 million rubles. The shareholder had suffered a loss from 143,000 shares, which were written off by registrar because of forged power of attorney. After that, Sibneft demanded through the Arbitrage Court from registrar R.O.S.T. and Insurance House VSK, which insured professional liability of the registrar, to compensate the oil company losses. However, because the law does not consider collective responsibility, the court asked Sibneft to separate its demands to each individual defendant. During the yesterday court hearings representatives of Sibneft decided to drop the case against Insurance House VSK. Now, the court would be examining arguments only between Sibneft and the registrar. "In our view, the case against the registrar is justified. For that reason we are satisfied with today's court results," The press service of Insurance House VSK told Kommersant. “The situation is quite simple," Oleg Zhiznenko, General Director of R.O.S.T., explained. "Most likely, the court will satisfy Sibneft's demand. We will pay out according to the court’s ruling. But after that, we will ask the insurance company to cover our expenses. Because our agreement with VSK includes insurance coverage for the risk of writing off stocks due to the forged power of attorney, we hope that the insurer will pay us out of court."

Saturday, December 17, 2005

Rosneft wins auction for Siberian oil-and-gas deposit

MOSCOW, December 16 (RIA Novosti) - Russian state-owned oil major Rosneft has won an auction to develop the East Sugdinsk oil-and-gas deposit in Siberia's Irkutsk Region, the company said in a news release Friday. The company offered $260.4 million for the license, the statement said. The license grants Rosneft the right to geological exploration of the deposit for five years and the extraction of mineral resources for 25 years. The deposit's natural gas reserves are estimated at 42 billion cu m, and crude reserves are estimated at 210 million metric tons.

Duma requests clarification over Evans appointment rumor

MOSCOW, December 16 (RIA Novosti) - The State Duma, Russia's lower house of parliament, has instructed the natural resources committee to request information from the government on the possible appointment of former U.S. Secretary of Commerce Donald Evans as chairman of Russian state-owned oil major Rosneft. Leading business daily Kommersant claimed Tuesday that Evans, a long-time ally of U.S. President George W. Bush, had had a personal meeting with Russian President Vladimir Putin in Moscow on December 7, at which the president offered him the position. Duma members are concerned about the national security implications of such an appointment. The Economic Development and Trade Ministry said Tuesday it had no official information to confirm the report. Kommersant said the move, if it were to come off, would be designed to reassure investors shaken by "the Yukos affair" in the run-up to Rosneft's initial public offering (IPO), which ministers have suggested will take place next year.

Friday, December 16, 2005

Rosneft may reorganize its subsidiaries to switch to single share

MOSCOW, December 16 (RIA Novosti) - Deputy Economic Development and Trade Minister Andrei Sharonov said Friday that the subsidiaries of state-owned oil major Rosneft could be transformed from public entities into limited liability companies (LLCs) to consolidate the company's assets into a single share. He said that the board of directors of some Rosneft subsidiaries had initiated the proposal. He added that Russian natural gas monopoly Gazprom practiced this form of corporate organization. Sharonov said LLCs were simpler in terms of reporting and control. "This form does not imply open-ended financing or control or the admission of new participants or shareholders," he said.

Wednesday, December 14, 2005

Ex-Bush Official May Head Rosneft

Donald Evans / Photo from www.usa.gov13.12.2005 MosNews - Donald Evans, a former U.S. commerce secretary, may become chairman of Russian state oil company Rosneft ahead of its initial public offering, Russian Kommersant daily reported on Tuesday, Dec. 13, quoting its own anonymous sources. The paper quoted sources close to the situation as saying that Evans met a number of top Russian officials during a trip to Moscow last week, including President Vladimir Putin with whom he talked on Dec. 7. The sources said Putin asked Evans to assume the post. Kommersant wrote the idea was part of Putin's plan to soothe Western investors, who are concerned about Russia's investment climate following the prosecution and downfall of oil major Yukos. As MosNews has reported, Russian authorities plan to partially privatize Rosneft, with a possible stake sale and potential IPO in London slated for 2006. Rosneft appeared on everyone's radar screens after it bought Yuganskneftegaz, the core production asset of the embattled Yukos, at a forced state auction in December 2004, paying a mere $9.4 billion for it. Now the state oil company is valued at $50-58 billion on the eve of the IPO. Some analysts, however, expressed concern that foreign investors may be unwilling to fund Rosneft's IPO because it would basically mean paying once more for the assets (Yuganskneftegaz) which they already bought once. Evans' appointment to the board of directors would then serve as a soothing guarantee that investments would be safe and sound. Rosneft was not immediately available for comment. At present time Donald Evans is the executive director of Financial Services Forum, an organization which unites the heads of 20 largest U.S. financial companies. The organization was established in 2000.

Schroeder Denies Critics Of His New Post 9:41 [] - Ex-German leader Gerhard Schroeder has rejected criticism of his holding a position of the shareholders commitee of North European Gas Pipeline Company, the joint venture of Russia's gas giant Gazprom? and two German firms, E.On and BASF. Mr Schroeder said he would be taking legal action after opposition politicians accused him of sleaze. He said the allegations against him are "nonsense" and announced that he was taking legal action - although he does not give any details about this. Politicians and the media have suggested there was a conflict of interest, with Mr Schroeder allegedly feathering his nest while acting in a public capacity.

Sunday, December 11, 2005

Germany's Dresdner To Buy Into Gazpron's Bank

12-09-2005 The St. Petersburg Times By Catherine Belton Staff Writer - Germany's Dresdner Bank is to buy one-third of Gazprombank, the subsidiary bank of Russia's powerful state-controlled gas giant, for $800 million in the second major German-Russian financial deal this week. Gazprombank said Wednesday that its board of directors had agreed to sell 6.67 million new shares to Dresdner for at least 23.2 billion rubles in a deal expected to go ahead in early 2006. The bank, Russia's third-largest, said the tie-up was aimed at improving its business and increasing its capital ahead of a possible initial public offering of its shares in London. The deal will further solidify a longtime partnership between Gazprom and the German bank, whose investment-banking arm in October advised Gazprom on its $13 billion purchase of Roman Abramovich's Sibneft. It will also likely strengthen ties between Dresdner and the Kremlin. Dresdner has played a key role in helping the Kremlin tighten its hold over the energy sector, and President Vladimir Putin is reported to have ties to the head of Dresdner's Moscow division, Mattias Warnig, that go back to his days as a KGB agent in Soviet-controlled East Germany. The Wall Street Journal earlier this year cited documents from East Germany's Stasi secret police and former colleagues of Warnig's as saying that he previously worked as a Stasi agent and helped Putin recruit spies in the West.Warnig has denied the report. The announcement of Dresdner's tie-up with Gazprombank came after Deutsche Bank said earlier this week that it had bought the remaining 60 percent of shares in investment bank United Financial Group. The deal was thought to be worth about $400 million. The two German deals are the latest in a series of investments by Western banks, which are rushing to invest in Russia's booming banking market. Other recent deals include loans by Morgan Stanley and Citibank to the Rosneft state oil company ahead of planned IPO in London. But while the UFG deal appeared aimed at securing a major role for Deutsche Bank in the country's upcoming stream of expected IPOs, Dresdner's acquisition of a blocking stake in Gazprombank appeared more likely to be a short term financial investment ahead of the Russian bank's IPO. With assets of $15 billion as of Sept. 30, the bank is often seen as Gazprom's treasury department. It has acted on Gazprom's behalf in acquiring significant stakes in electricity monopoly Unified Energy Systems and also holds the gas giant's vast media assets, including NTV television and the Izvestia daily newspaper. "This is a much bigger fish than UFG," one banker said on condition of anonymity. Gazprombank's chairman, Andrei Akimov, the low-profile former head of the Central Bank's foreign subsidiary, Donau Bank in Austria, counts among his aides Alexander Ivanov, the son of Defense Minister Sergei Ivanov. "Gazprom wants to expand the role of Gazprombank from being a proxy for the treasury department to become a more broad-based bank to compete with … Vneshtorgbank and Alfa Bank," said Chris Weafer, chief strategist at Alfa Bank. "This is consistent with the government's overall objective for state companies to take a dominant role in strategic industries, and it is another sign of how lucrative the Russian banking sector appears to foreign banks."

Saturday, December 10, 2005

Gazprom Begins Construction of Controversial Baltic Gas Pipeline

09.12.2005 MosNews - On Friday, Dec. 9, Russia's natural gas monopoly Gazprom began official construction of the 1,200 kilometer (744 miles) pipeline that will deliver Russian gas to Germany and other European nations via the Baltic Sea, bypassing transit countries such as Ukraine, Poland, and the Baltic states. The pipeline is due to become fully operational by 2010. The launch ceremony is to be attended by Russia's Prime Minister Mikhail Fradkov and Germany's Economy Minister Michael Glos. The ceremony will include the symbolic welding of two pieces of pipeline. The pipeline will link the Russian port of Vyborg and the town of Greifswald in north-eastern Germany. The North European Gas Pipeline has already stirred a lot of controversy in transit countries, such as Poland and Ukraine, prompting concern that Russia's neighbors will eventually be cut off from Russia's gas supplies. MosNews has reported on previous occasions that Poland has called the pipeline plan a "conspiracy" against its interests, while the Baltic states offered their own pipeline project and cited environmental concerns trying to prevent Gazprom's project from starting. The $5 billion pipeline deal was struck between Russia and Germany this September, just before German Chancellor Gerhard Schroeder lost power. Germany, Europe's biggest economy, relies on Russia for a third of all its oil and gas imports, with the rest of Western Europe importing one quarter of its gas needs from Russia. Gazprom has signed a partnership for the project with Germany's BASF and E.ON. The Russian giant has a 51-percent stake in the North European Gas Pipeline Company, while German firms each have 24.5 percent stakes. Gazprom has said that it may take a third partner into the project, thus reducing the stakes of BASF and E.ON. It plans to make the final decision on the candidate by April 2006.

Russian Parliament Passes Law on Gazprom Liberalization

Gazprom logo09.12.2005 MosNews - On Friday, Dec. 9, the State Duma, the lower house of the Russian parliament, passed an amendment to article 15 of the federal law "On gas supply", thus lifting restrictions on non-resident ownership of shares in natural gas monopoly Gazprom and paving the way for Gazprom share market liberalization. A total of 335 deputies voted in favor, with 80 voting against and no abstentions. The amendment will end the division of the Gazprom share market and lift the restriction on the amount of shares in the company that can be owned by foreign companies and citizens. At the present time foreign ownership of Gazprom stock is limited to 20 percent, and foreigners can only buy Gazprom ADRs which trade at a premium to domestic shares. The Russian stock market also awaits liberalization, because at present Gazprom shares can only be traded on the St. Petersburg stock exchange, and not in Moscow. Gazprom liberalization was promised by President Vladimir Putin back in September 2004, but the process was constantly delayed. The price of Gazprom shares kept growing on expectations of liberalization and now the gas monopoly's market capitalization exceeds $100 billion. Still, some experts say that following liberalization Gazprom's market capitalization should be no less than $600 billion.

Wednesday, December 07, 2005

Gazprom To Get Operating License On Sakhalin

07.12.2005 9:46 [] - Gazprom, which earlier declared its interest in oil and gas production on the Sakhalin shelf, may soon obtain first operating licenses in the region, Russian business daily Kommersant reported. the purchase of TNK Sakhalin, the holder of the geological exploration license for the Lopukhovksy ground. Sibneft is negotiating with TNK-BP to acquire TNK Sakhalin, operator of the Lopukhovsky ground of the Sakhalin shelf. TNK-BP explained their willingness to sell the company by a need to review their assets but would not comment on details of the deal. Gazprom, owner of 75.6 percent in Sibneft, refrain from comments yesterday. Probable reserves of the Lopukhovsky ground are estimated at 130 million metric tons of oil and 500 billion cu. meters of gas. TNK-BP obtained a 5-year exploration license in 2002 and was set to put $60 million into the project and later attract foreign investors to boost the sum to $4 billion if it obtained a commercial license. Informed sources of Kommersant state that TNK-BP decides to sell TNK Sakhalin after “officials made a broad hint that BP’s chances to get a commercial license are outside”. Gazprom as a state-controlled company will not have these problems, the source claims.

Gazprom share liberalization to end "gray schemes"

MOSCOW, December 7 (RIA Novosti) - The lifting of the "ring fence" around common shares in the Russian energy giant Gazprom, which will thereby allow foreigners to buy stock in the natural gas monopoly, will led to shares emerging from semi-legal "gray schemes", a senior Russia official said Wednesday. Oleg Vyugin, the head of the Federal Service for Financial Markets, said that the share liberalization would not affect the stability of the financial market. Estimates suggest that 10% of Gazprom shares are currently owned by foreign entities through "gray schemes" grudgingly tolerated by the government and Gazprom. Vyugin said some Gazprom shares had been placed with depositaries to pay for obligations under 'gray schemes,' but with the enactment of the liberalization law, owners of securities would obviously legalize these shares. "We will not hinder this," Vyugin said, adding that this was the crux of the liberalization process. The Russian parliament's lower house, the State Duma, approved in November amendments to the bill on Gazprom's share liberalization, which envision an end to the 'ring fence' around the energy giant's shares, allowing foreign entities to buy stock in the company. Vyugin said that the Duma would probably endorse the bill in its final reading by the end of the year, which should then be followed by governmental and presidential approval, and the "ring fence" could be lifted after the New Year's holidays on January 10. When that happens, up to 49% of Gazprom's common shares will be publicly traded with no ownership restrictions. The government wants to abolish several presidential and government resolutions dating back to the 1990s that impose restrictions on the number of stock exchanges trading Gazprom shares, their quota for non-residents and set out procedures for acquiring Gazprom shares for non-residents. The restrictions were designed to prevent a foreign takeover of Gazprom. The proposed legal acts would lift the "ring-fence" around Gazprom shares, allowing foreigners to buy the stock in Russia and abroad. The government will retain its recently acquired majority control of the company.

Tuesday, December 06, 2005

Gazprom to spend $2.2 bln on underground gas storage program

MOSCOW, December 6 (RIA Novosti) - Russian energy giant Gazprom will spend $2.2 billion on the company's underground natural gas storage system in Russia from 2005-2010, the head of Gazprom's Gas Transportation, Underground Storage and Utilization Department said Tuesday. Bogdan Budzulyak said $1.8 billion would be spent on creating an underground technical complex, and $400 on exploration drilling. Budzulyak said through the program, named Program 700, the company's underground gas storage capacity would reach 700 million cubic meters per day during storage season. The program is part of the overall plan for developing the gas sector up to 2030. In order to implement Program 700, investment will need to be more than doubled compared to expenditures for 2005, Budzulyak said. Reserves totaling 62.6 billion cu m were stored in Gazprom's underground system in advance of the fall-winter season 2005-2006, the official said. The previous year, this figure was 62.5 billion cu m, with an average daily usage rate from December-February of 470.5 million cu m. By 2030, the volume of gas in the underground system will total 110 billion cu m, with a maximum daily usage capacity of more than 1 billion cu m.

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