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Wednesday, March 22, 2006

Gazprom could invite foreigners to Sibneft

03-22-2006 Analytical department of RIA RosBusinessConsulting - On 21 October 2005 Gazprom purchased a 72 percent stake in oil company Sibneft from Millhouse Capital for $13 billion. Another 20 percent of Sibneft stock is controlled by YUKOS. Sibneft increased production to 45.12 million tons in 2005 from 45.05 million tons in 2004. Without a 50 percent stake in Slavneft, which is jointly owned by Sibneft and TNK-BP, Sibneft's output stood at 33 million tons, or 2.9 percent down on the previous year. Its production is expected to drop further this year, to 32 million tons. Sibneft President Alexander Ryazanov said the company would seek to buy new oilfield licenses in 2006, allocating $150 million for the purpose. A rumor that Gazprom wants to sell part of its stake in Sibneft spread shortly after the acquisition. The gas company's statements about plans to consolidate its entire oil business around Sibneft failed to dispel the persistent rumor. Meanwhile, Sergei Sergiyenko, business director for fuel and energy market at Development of Business Systems, said billions of dollars in investment were needed to develop Sibneft's oilfields. Many expected Sibneft to invite a foreign investor having access to cheap loans from western banks. The company's recent policy seems to confirm this idea, with Gazprom offering minor stakes in its projects in exchange for foreign assets. Sibneft might also be slated for sale. A source in Gazprom told RBC Daily that the gas company planned to swap a block interest in Sibneft for a foreign asset over the next two years. The insider did not say whether talks with potential partners were underway and what Gazprom wanted in return for Sibneft. Sibneft's press secretary Alexei Firsov told RBC Daily he was unaware of Gazprom's plans to sell a stake in Sibneft. Nadezhda Kazakova, at Alfa Capital Markets, said the market value of a block stake in Sibneft was $5.3 billion, but it could be valued much higher for a swap operation. Observers say Gazprom is primarily interested in liquefied gas projects. "Gazprom is not at all represented on this market, not to mention its agreement to buy a stake in Sakhalin Energy, where production has not yet begun," Alexei Logvin, chief consultant at Interfin Trade, told RBC Daily. In theory, Sibneft may be of interest to all large oil companies operating in Russia, including Shell, Total, Statoil, Chevron and ConocoPhillips, Kazakova believes. Andrei Gromadin, at MDM Bank, agrees, noting that foreigners did not have many opportunities to buy into a Russian oil producer. Maxim Shub, representing Shell in Russia, refused to say whether Shell planned talks with Gazprom. Irina Rybalchenko, a spokeswoman for Chevron, said Gazprom would announce the results of the Shtokman gas field tender on 1 April. Under the terms of the tender, the winner shall offer Gazprom a share of its business. "If we get 49% of the project's shares, Chevron will make a commercial counteroffer to Gazprom," she said. Another analyst, who asked not to be named, did not rule out that some of the failed bidders for Shtokman would offer Gazprom their assets in exchange for Sibneft stock. Gazprom's short list for Shtokman includes almost all potential bidders for Sibneft, among them Chevron, ConocoPhillips, Statoil and Total. The latter has long been eyeing Sibneft, MDM analysts say. Spokesmen for ConocoPhillips, Statoil and Total were unavailable for comment.

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