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Monday, January 28, 2008

Vekselberg names his price

24 January 2008 - Upstream OnLine - Billionaire Viktor Vekselberg would be prepared to sell his stake in Russian producer TNK-BP if the buyer pays $60 billion for the entire company - a huge premium to current prices, it was reported today. Vekselberg told Moscow-based business daily Vedomosti neither he nor his Russian partners were holding talks Russia's with gas export monopoly Gazprom or state oil major Rosneft about selling their holdings. Such a move became possible after a lock-up period on the Russian shareholders, who have 50% in TNK-BP, and UK supermajor BP , which owns the remaining 50%, expired at the end of last year. Vekselberg and other Russian stake holders have repeatedly denied plans to sell, and Vekselberg's interview is the first indication of a price at which the sale would be possible. "(I would be prepared to sell out) based on the company's overall capitalisation of $60 billion. But no one is offering such money," he told the newspaper. TNK-BP's market capitalisation has been fluctuating around $40 billion for the past year, but recently slid to just $25 billion. The listed entity does not include TNK-BP's 50% stake in mid-sized venture Slavneft, which analysts say is worth another $7.5 billion to $10 billion. Vekselberg also said TNK-BP's 62.9% stake in the giant Kovykta gas field was worth $1 billion, more than the previously suggested $600 million to $800 million. Vekselberg said the increase in the price was due to TNK-BP's investments in the project as it had spent over $200 million in the last six months. Under a deal, signed in June, Gazprom was to buy control in Kovytka from TNK-BP and then sell 25% back to it as part of a broader strategic pact. But finalising the deal, which was meant to happen in December last year, has been delayed fuelling market talk that Gazprom is unwilling to buy Kovykta because it will ultimately own the field later by buying into TNK-BP. "We did not receive any offers from Gazprom, either vocal or written. We are not having talks. As far as I know our partners are also not looking at letting TNK-BP go," Vekselberg said. "(We have) a development strategy for at least the next five years. Why leave the company? Today our expectations are higher than any propositions the market could make," Vekselberg said. Despite multiple denials by TNK-BP's key state holders, analysts still expect Gazprom to buy at least 50% in the company as early as this year as the Kremlin is seeking to further tighten its grip over the strategic energy sector.

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