RusEnergy

24 July 2007 - Upstream OnLine - Mikhail Gutseriyev, the owner of Russian oil producer Russneft, will cede control in his company to a Kremlin-friendly outfit after months of state pressure, sources close to talks claimed today. Gutseriyev will also step down as Russneft's president following a string of back tax claims brought by state officials. "I think the company will have another president within a week," one source told Reuters. Vedomosti business daily reported that Gutseriyev would sell the company to Russia's second richest man Oleg Deripaska, a close ally of President Vladimir Putin, for around $6.5 billion. However, Russneft spokesman Eduard Sarkisov denied Gutseriyev would quit or sell the company. In a subsequent statement, Russneft called reports of an impending sale a "provocation". " Russneft states officially that it has held no talks about a sale and will not hold any. Russneft is not for sale," it said. A second industry source told Reuters that state-controlled oil giant Rosneft was also looking at Russneft, which produces 300,000 barrels per day, has two refineries and recoverable reserves of around 4.6 billion barrels. "I can't imagine why this asset should escape from Rosneft's control. Rosneft has amassed all important assets in Russia over the past years," one source told the news agency. Deripaska's investment vehicle Basic Element denied it was in talks to buy Russneft. Analysts said Russneft was poised to end up under state control. "Russia may be one step closer to boosting state control over oil production to above 50%," Reuters quoted Oleg Maximov from Troika Dialog brokerage as saying. Tax officials have brought a string of tax claims against Gutseriyev, threatening to nationalise Russneft's shares. Yesterday, Moscow's Arbitration Court upheld a first $134 million tax evasion claim against Russneft. Gutseriyev is himself charged with "illegal activities committed by an organised group on a grand scale". Russian media reported Gutseriyev had fallen out of Kremlin favour by buying assets from rival oil company Yukos before its bankruptcy last year. "I think Gutseriyev didn't learn any lessons from the Yukos affair," Ivan Mazalov, who helps manage $4.5 billion worth of assets at Prosperity Capital Management, told Reuters. Yukos, once Russia's largest oil producer, was brought to its knees by a $30 billion back tax claim. Its founder Mikhail Khodorkovsky called it politically motivated, as he accused the Kremlin of seeking to punish him for his political activities. Khodorkovsky is now serving an eight-year prison term in Siberia for tax evasion and fraud, while the assets of Yukos are now almost fully controlled by Rosneft. Russneft was set up five years ago from scratch when Gutseriyev, formerly the head of state-controlled oil player Slavneft, bought some Slavneft assets at knock-down prices soon after its privatisation. Gutseriyev repeatedly denied any wrongdoing in those transactions, some of which were done with the financial help of Swiss-based oil trader Glencore.