RusEnergy

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.