Russia 090423 Basic Political Developments

TNK-BP Bids for Minority Sibir Stake

http://www.themoscowtimes.com/article/600/42/376505.htm
23 April 2009

By Anatoly Medetsky / The Moscow Times

TNK-BP began a blitz bid Wednesday to buy a minority stake in smaller rival Sibir Energy, offering an impressive £4.30 per share, 2 1/2 times more than its last closing price.

Credit Suisse International said it was ready to buy a "significant minority stake" in the company on behalf of TNK-BP until Thursday.

TNK-BP, the country's third-largest oil producer, may gain up to 35 percent of Sibir Energy -- all that is not owned by two private Russian shareholders and the Moscow city government. It is unusual for a major oil company like TNK-BP, half owned by BP, to settle for the role of a minority shareholder unless it hopes to build up the stake to gain control of the company later.

"TNK-BP ... has not reached any agreement to acquire shares from the controlling shareholders," Credit Suisse said in a statement that announced the bid Wednesday afternoon.

The bank set the purchase price at £4.30 ($6.26) a share, valuing the entire London-listed company with assets in Russia at $2.4 billion.

TNK-BP may end up paying as much as $842 million for 35 percent of Sibir Energy, said Svetlana Grizan, an analyst at VTB.

Sibir Energy said TNK-BP had not approached the company to discuss a stake purchase. Another company, however, was interested in possibly making an offer for Sibir, Sibir said in a statement, without identifying the company.

"Discussions with that party are at a very preliminary stage, and there can be no guarantee that an offer for Sibir will be forthcoming," it said.

State-owned Rosneft has contacted Sibir to discuss a potential bid for the company, The Times of London reported Monday.

A TNK-BP spokeswoman declined to comment, but a BP spokesman said his company supported the bid. "We are quite behind TNK-BP on this sort of activity," spokesman Toby Odone said. "We have a good track record in Russia, and we are very keen to deepen our investment."

Sibir suspended trading in its shares in February after it learned that one of its major shareholders, Shalva Chigirinsky, owed the company $325 million. Sibir sued Chigirinsky and former chief executive Henry Cameron to recover "funds that were taken from the company," it said earlier this month.

The company has a 50-50 oil-producing venture with Royal Dutch Shell in Siberia, owns a refinery in Moscow jointly with Gazprom Neft, an oil arm of Gazprom, and runs filling stations.

Chigirinsky and another Russian businessman, Igor Kesayev, each own slightly more than 23 percent of Sibir, but Sberbank now holds their stakes as collateral for loans. The Moscow city government holds 18 percent of the oil company.

TNK-BP is likely betting that it will be able to acquire a controlling stake at some point, Grizan said. "The most unusual thing is that TNK-BP agreed to a minority stake," she said. "They are probably hoping to buy out either Chigirinsky's or Kesayev's stake afterward."

TNK BP may make an offer for Zhaikmunai

http://businessneweurope.eu/users/subs.php

Troika, Russia

Wednesday, April 22, 2009

TNK BP is considering making an offer for Zhaikmunai, an oil producer in Western Kazakhstan, Reuters reported yesterday, citing sources close to the Russian company.

Zhaikmunai produced about 7,150 bpd of oil at its Chinarevskoye field in February, according to InfoTEK, and has proven oil reserves of 47.2m bbl (in addition to proven gas reserves of 48.4m boe), and probable oil reserves of 138.2m bbl (plus probable gas reserves of 145.5m boe). Its net debt was $236.5m as of end 1H08, giving it an EV of $522.5m and an EV/1P reserves ratio of 5.5.

As always, we refrain from commenting on the merits of the transaction before we know the price. However, we believe that the possibility of the deal has positive implications for TNK BP and for KazMunaiGas EP.

We estimate that TNK BP Holding (the main constituent part of TNK BP Ltd) generated net income of about $1.5bn in 2H08, for a rough operating cash flow estimate (net income plus depreciation) of $2.2bn and free cash flow (subtracting capex) of about $400m. (TNK BP Ltd would also likely reap some cash flow from its stake in Slavneft, but that amount would be minimal). TNK BP Holding had $848m in cash on its books at end 1H08, but assuming 2008 net income of $6.4bn and the company's commitment to keep its payout ratio at around 40%, it would face a dividend payment of about $2.5bn for the period between end 1H08 and this year (some $1.4bn of that has already been declared in interim dividends). A source at TNK BP has told Kommersant that the company has enough money to buy Zhaikmunai, so assuming it does not leverage up to do so, TNK BP must have posted higher free cash flow in 2H08 than our projections would indicate if it is confident of being able to afford Zhaikmunai.

According to previous reports, TNK BP is also eyeing the purchase of Sibir Energy.

However, Reuters also reported yesterday that TNK BP Ltd was seeking a $315m syndicated loan to refinance existing debt.

The deal would also be good for investor sentiment toward KazMunaiGas EP. This is a second instance of interest in Kazakh oil companies reported over the past week (the first was the Chinese state oil company's acquisition of a stake in MangistauMunaiGas), suggesting that strategic investors are attracted to the sector. Further, even without any acquisition premium, Zhaikmunai is valued at an EV/1P of 5.5, compared with 4.2 for KazMunaiGas EP. The Kazakh government, via national oil holding NC KazMunaiGas (the parent company of the traded KazMunaiGas EP), by law has the right of first refusal on the asset, which means that if the price is attractive, Zhaikmunai might eventually find itself a part of KazMunaiGas EP.

Oleg Maximov


Belokamenka crude terminal to handle 9mil tonnes

http://www.tankstoragemag.com/industry_news.php?item_id=738

22 April 2009

The Russian oil terminal of Belokamenka is expected to handle 8 million tonnes of oil from Varandey oil export terminal and 1 million tonnes of Rosneft oil, in 2009.

LUKOIL and Rosneft are poised to sign an agreement on transshipment of Russian export oil from Varandey via Belokamenka terminal.

There are certain issues to be finally regulated after integration of the fishing and commercial ports’ administrations due to imperfect legal basis. The issue will be closed upon of the approval of Rosrybolovstvo and the Ministry of Transport.
Russia tries to control gas supplies to Europe through new deals: experts

http://capital-en.trend.az/oil/oilgas/1459809.html

23.04.09 10:45

Azerbaijan, Baku, April 22 /Trend Capital, A.Badalova/

Russia is trying to control gas supplies to Europe and prevent the implementation of competitive projects, like Nabucco project, through signing gas deals with Azerbaijan.

"Russia is making every effort to get volume of gas, including, offering deals at market prices. This is a big geopolitical game," the Russian Alfa-Bank Oil and Gas Senior Analyst Shirvani Abdullayev told Trend Capital over phone.

In March, the Russian Gazprom and Azerbaijan have agreed to start negotiations to determine conditions of gas supply from Azerbaijan in January 2010. In the near future, Gazprom and the State Oil Company of Azerbaijan (SOCAR) will conduct a technical inspection in the sections of the Baku - Novo-Filya gas pipeline system. Azerbaijan will supply gas to Russia via this route.

Russia needs more constructive relations with such countries as Azerbaijan and Turkmenistan.

Azerbaijan analyst of the Russian Unicredit Securities Pavel Sorokin said that Russia is trying to contract gas, including with Middle Asian countries, so that European countries fail to fill the proposed Nabucco pipeline.

Azerbaijan in its turn will benefit from the cooperation with Russia, as there are fixed prices and enough transparent relations.

Azerbaijan possesses 2 billion cubic metres of natural gas reserves. Azerbaijan consumes 12-14 billion cubic metres of gas per year.

Azerbaijan will probably not commit to more than small volumes, the American Energy Security Analysis Company expert Andrew Reed said.

"Azerbaijan will do what is in its best interests. Azerbaijan supports Nabucco, so it is in not in Azerbaijan's interest to commit to deliver large enough volumes of natural gas to Russia that Nabucco will be scuttled," Reed said. This will enable Azerbaijan to reduce transit risk and maintain flexibility in relations with Russia.

The possible partnership between Russia and Azerbaijan might further reduce the appeal of Nabucco, the Italian Bruno Leoni Institute Director Carlo Stagnaro said.

"The problem is that, economically speaking, it would be hard to sustain both the Nabucco and the South Stream gas pipelines, especially if Russia's and Azerbaijan's interests get closer. We are still seeing the problems that arise from the ambiguous position of the European Union, that so far hasn't been able to make a clear choice regarding what is its strategic interest," Stagnaro wrote to Trend Capital via e-mail. .

The Nabucco project worth $7.9 billion euro ($10.1 billion) will deliver Azerbaijani and Central Asian gas to the EU. Construction of the pipeline is expected to commence in 2011. Its maximum capacity will be 31 billion cubic meters per year.