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Monday, February 27, 2006

Rosneft Boss Woos Investors Globally

Monday, February 27, 2006 - The Moscow Times - SURGUT - Rosneft president Sergei Bogdanchikov is courting investors to build the state oil company's $20 billion initial public stock offering into the main event on the world's emerging markets this year. Bogdanchikov, an oil industry veteran, said the company had already received positive feedback from investors and would crank up efforts to drum up interest in Russia's largest-ever IPO. Speaking to reporters in a luxury jet high over the oil fields of Siberia, Bogdanchikov said Rosneft was considering placing shares on up to seven exchanges, including London, Tokyo, New York and Frankfurt. "Management presented to the board of directors a choice of six or seven exchanges," Bogdanchikov said, relaxing in the jet's plush seating. He spoke to reporters Friday and his comments were approved for publication Sunday. Russia plans to sell up to 49 percent of Rosneft -- the country's second-largest oil producer -- via an international stock offering later this year during which a strategic investor could take a major stake. "We have a clear plan for the road show and meetings with investors," Bogdanchikov said. "We have already had meetings with 70 percent of the main funds." Rosneft -- whose chairman, Igor Sechin, is deputy head of the Kremlin administration -- leapt up the rankings last year, after it took control of Yuganskneftegaz, formerly the main asset of fallen oil major Yukos. Bailiffs auctioned Yuganskneftegaz for $9.3 billion in Dec. 2004 to recover back taxes owed by Yukos. A foreign strategic buyer could take a major stake in the IPO as long as the state kept control over Rosneft, Bogdanchikov said: "We would recommend the owner not refuse a sale to a so-called major or a state company from another country." India's Oil & Natural Gas Corp. has been named as one potential buyer, as has China National Patroleum Corp. -- which could have an advantage in any bidding contest as Rosneft heavily mortgaged its future oil sales to Chinese banks to finance the Yugansk purchase. Around $7.6 billion raised from the sale of a 13 percent stake in Rosneft would go to repay money owed by its parent, Rosneftegaz, which was set up by the Kremlin as a special-purpose vehicle to buy back majority control over Gazprom last year. The remaining proceeds of $12 billion -- likely from an issue of new shares -- would pay down Rosneft's own debts, finance current spending and new investment. For minority shareholders in Rosneft's subsidiaries, the company's consolidation of its units is a major concern ahead of the initial public offering. Rosneft will propose minorities swap their stakes into shares in the parent company but has yet to name the conditions for the consolidation. Bogdanchikov said Rosneft was continuing work to consolidate its 12 main production units. But he said a final decision on consolidating Yugansk -- in which Yukos still owns a 23 percent non-voting stake -- had not yet been made. "Work is going on, the structure is being more intensively researched, and the list may be widened," he said. Rosneft's 2005 profit rose to "just over" $5.5 billion, Bogdanchikov said, Bloomberg reported, quoting Interfax. Rosneft tripled output after it acquired Yuganskneftegaz last year to 1.5 million barrels per day -- enough to supply Spain.

India to Take Over China's Bid for TNK BP's Udmurtneft Unit

Image from TNK-BP site22.02.2006 - MosNews - China National Petroleum Corporation has abandoned its plan to bid for TNK-BP's Russian oil unit Udmurtneft, sources told Reuters on Tuesday, Feb. 21. Meanwhile the rival Indian Oil and Natural Gas Corporation has formally joined the race, taking over China's bid. Sources familiar with the matter said CNPC had dropped the idea to bid in the belief it can never beat Russian rivals in the $3 billion auction. Following discussions with its financial advisers, CNPC decided last week not to express interest in Udmurtneft on Friday, Feb. 17, which was chosen as the deadline for the seller to receive first-round bids. "The expression of interest was due on Friday. They finally decided not to proceed," said one of the sources, who asked not to be identified. CNPC believes Russian companies such as Sibneft and Russneft would put in more aggressive bids because an acquisition would create synergies with their existing portfolios, the sources said. Sibneft, controlled by Russian gas giant Gazprom, has made a preliminary offer for Udmurtneft. Russneft, which has spent more than $800 million on TNK-BP assets already, is also bidding for Udmurtneft. "According to our analysis, a Russian company will be the most probable winner in this transaction," said another source close to CNPC. A CNPC spokesman in Beijing declined to comment. The Kremlin has recently tightened its grip on the oil sector and is trying to limit foreign involvement in the lucrative industry with repeated failures by CNPC or Indian state oil firm ONGC to buy Russian assets. ONGC, which is no less hungry for oil assets abroad than its Chinese rivals, is likely to have another go as Russia's mid-sized gas producer Itera said on Tuesday, Feb. 21, it had set up a venture with the Indian firm to jointly bid for Udmurtneft. Itera said in a regulatory statement it would hold 51 percent in the venture, while ONGC will hold the remaining 49 percent. CNPC, the parent of Hong Kong- and New York-listed PetroChina Co, also initially wanted to team up with a Russian firm for a joint bid for Udmurtneft to increase the chance of winning the asset, but it failed to find one, the sources said. Udmurtneft, which started operation in 1969, produced 5.8 million tons of oil in 2004 and has reserves equivalent to around 1 billion barrels of oil. Some sources have said the asset carried an estimated value of around $3 billion. Deutsche Bank and UBS are the financial advisers for TNK-BP on the sale of Udmurtneft. TNK-BP is half owned by oil major BP Plc.

Russia to Sharply Increase Oil and Gas Exports to Asia-Pacific � Minister

22.02.2006 - MosNews - Russia intends to sharply increase exports of oil and natural gas to the Asia-Pacific region over the next 14 years to meet soaring demand there, the Russian government daily Rossiikaya Gazeta reported on Wednesday, Feb. 22, quoting Industry and Energy Minister Viktor Khristenko. In an interview given to the newspaper Kristenko said that Russia is planning a sharp boost in oil and gas exports to the countries of the Asia-Pacific region by the year 2020. He predicted that Asian countries would consume more and more energy in the foreseeable future while Western countries would continue to seek to regulate or cut back on energy consumption. The official named several projects which aim to provide long-term supply of fuel to Asian consumers. These include huge oil and gas deposits on the Sakhalin shelf and near the Kamchatka peninsula as well as new petroleum resources in Eastern Siberia. Khristenko said Russia was also interested in joint development of hydroelectric power and atomic energy in Asia where an appetite for oil and gas is surging. His comments came less than a week after Prime Minister Mikhail Fradkov said in Hanoi that Russia was ready to help build a major dam and a nuclear power plant in Vietnam.

Repsol plans to help build LNG plant in Primorye

MADRID/MOSCOW. Feb 26 (Interfax) - Spanish oil and gas company Repsol YPF, one of the biggest players on the liquefied natural gas (LNG) market, is planning to take part in a Gazprom (RTS: GAZP) project to build a liquefied natural gas (LNG) plant in Primorye, Repsol said in a report. "In February, a memorandum of agreement was signed with the Russian state-owned company, Gazprom, to develop joint ventures in liquefied natural gas. Under this MOU, Repsol YPF will participate in the "Baltic LNG" project for the construction of an LNG plant in St. Petersburg, producing gas for the American and European markets. Apart from its experience in the LNG business, Repsol YPF contributes in this venture with its regasification capacity, excellent position on the Atlantic markets, and in particular its major role in the Spanish market," the report says. Cooperation with Repsol in the LNG sector would be very beneficial for Gazprom from the point of view of logistical supplies of LNG, a source in a Russian company told Interfax. Repsol currently supplies LNG to Spain from Caribbean countries. If Gazprom could organize its own LNG deliveries to Spain, then favorable swap deals could be organized for Repsol gas on the North American markets from the Caribbean, the source said. Interfax was not able to get any comments from Repsol because of the weekend.

Oil sector securities drive stock market up

RBC, 26.02.2006, Moscow 12:14:38 - The Russian stock market opened on a steady upward trend in most securities. Oil-sector securities proved to be the top gainers. On MICEX, Surgutneftegas surged by 2.6 percent during the first few minutes of trade, and LUKoil added 1.5 percent. On the RTS stock exchange, Surgutneftegas soared 3.3 percent, LUKoil 2 percent, and Novatek 8.6 percent. The RTS index reached a level of 1,485.49 points in half an hour, up 1.36 percent on the opening rate. Specialists attribute the market's positive opening to the growth of Russian ADRs during the vacation of February 23 to 25. However, trader activity is expected to remain low in Russia, today being a day off on international exchanges.

Sakhalin I oil output reaches 345,000 tons

YUZHNO-SAKHALINSK, February 27 (RIA Novosti, Pyotr Tsyrendorzhiyev) - Industrial oil production of the Sakhalin I project totaled 345,000 metric tons since October 2005, the Exxon Neftegas Limited press service said Monday. "The current oil output is about 6,000 [metric] tons per day [44,000 bbl/d]," a company spokesman said. "We are planning to begin oil shipments from a terminal in De-Kastri (the Khabarovsk Territory) later this summer." The Sakhalin I consortium has also supplied 158 million cubic meters of gas to consumers in Russia's Far East. The monthly gas supply capacity of the project is currently 74 million cu m and could be increased to 118 million cu m by the end of the year, depending on seasonal demand, the development of infrastructure in the region and the completion of the remaining phases of the project. The Sakhalin I project, the largest foreign direct investment project in Russia, is an international consortium comprised of operator Exxon Neftegaz (30%), Russia's Rosneft (20%), India's ONGC (20%), and Japan's SODECO (30%), to develop the Arkutun-Dagi, Odoptu, and Chaivo deposits on the island's northeastern shelf. Their recoverable reserves are estimated at 2.3 billion barrels of oil and 17.1 trillion cubic feet of natural gas. By the end of 2006, the consortium plans to begin operating an onshore oil facility at the Chaivo field to increase shipping capacity to 33,000 tons/day (242,000 bbl/d).

Tuesday, February 14, 2006

Russia's Top Oil Producer Lukoil Plans Acquisitions in US, Europe

14.02.2006 MosNews - Lukoil, Russia's largest independent crude producer, is planning to make a number of major acquisitions in the United States and Europe, the company's president Vagit Alekperov said on Monday, Feb. 13, during his meeting with President Vladimir Putin. During the meeting Alekperov also said aggressive investment work in Eastern Europe had been started, mainly in oil refineries. He added that Lukoil's gas stations abroad were also a major source of revenue. "Lukoil has about 2,000 gasoline stations working in the U.S. and about 600 in Western and Eastern Europe. These are good assets, which bring decent revenues," he said, quoted by RIA Novosti. Putin asked whether the company felt government support. "The Foreign Ministry has been extremely helpful, lobbying our interests [abroad] in a good sense," Alekperov said. He said the president's upcoming visit to Hungary, where the company owns a chain of gas stations and supplies oil products there, would also be productive for Lukoil. President Putin hailed Lukoil's activities in Europe, saying they contributed to Russia's economic growth, as well as to the economic development of regional countries.

Monday, February 13, 2006

Russia to create global natural gas market - French finance minister

MOSCOW, February 11 (RIA Novosti) - Russia plans to create a global natural gas market similar to the oil market, the French finance minister said Saturday. Thierry Breton said after a G8 finance ministers' meeting in Moscow that new ways to transport natural gas and build new gas pipelines via both Europe and Asia were being discussed. Breton said France would allocate a certain amount of money for the purpose via the European Investment Bank. The German finance minister backed the construction of the North European Gas Pipeline, saying it would help stabilize gas prices.

Wednesday, February 01, 2006

Russia won't prevent BP from boosting its hydrocarbon reserves in Russia-Putin

BRIEFLY MOSCOW. Jan 31 (Interfax) - Russia will not stand in the way of British oil company BP increasing its hydrocarbon reserves in Russia, Russian President Vladimir Putin said at a press conference in the Kremlin. "I think that BP already produces one-third of its production in Russia. This is a huge amount," he said. "Furthermore, BP's reserves in Russia are growing and the Russian government would like to see that these large resource reserves are put under the control of the joint venture TNK-BP. We will continue to go along this path," Putin said.

Moody's upgrades Sibneft to Ba1

MOSCOW, January 31 (RIA Novosti) - The Moody's ratings agency raised Russian oil company Sibneft's corporate rating to Ba1, senior unsecured rating to Ba2, with a positive outlook, the agency said in a news release Tuesday.

State will not monopolize oil or nationalize companies - Putin

MOSCOW, January 31 (RIA Novosti) - Russia has no plans for state monopolization of the oil and natural gas sector and does not intend to nationalize any of its major oil companies, Russian President Vladimir Putin said at his annual news conference Tuesday. Putin said, however, that the oil and gas sectors were under government control in many countries of the Organization of Petroleum Exporting Countries (OPEC), as well as some leading non-Opec countries such as Norway. "There are about a dozen large private oil companies in Russia, including LUKoil, TNK-BP, and Surgutneftegaz," Putin said. "The government is not going to nationalize them or interfere with their operations." Putin said they would continue operating as private companies, in line with the need of the market. "This is the best possible balance for the Russian economy," he said. He also said the British partners in the TNK-BP joint venture were satisfied with the market conditions in Russia. UK oil major BP produces one third of its oil through the joint venture, Putin said. "This is a huge amount," he said. "The Russian government has allowed joint ventures to develop vast resources," Putin said, in what he said was a Russian contribution to global economic stability. "This is the road we will continue pursuing."

Russia reduces crude export tariffs by $19

MOSCOW, February 1 (RIA Novosti) - Russia reduced customs duties on exports of crude and oil products by $18.80 to $160.80 on Wednesday. According to a decree signed by Prime Minister Mikhail Fradkov, the reduction covers crude and oil products designed for exports outside the member countries of the Customs Union, which comprises a number of former Soviet states.

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