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from Stratfor.com
Summary
In another auction by the bankrupt oil firm Yukos, Russia’s state-controlled Rosneft has acquired the Yukos production unit Tomskneft for $6.8 billion, making Rosneft the largest oil firm in Russia. Noticeably absent from the auction was Rosneft’s rival, state-controlled Gazprom – evidence of the Kremlin’s continued push for balance between the two companies.
Analysis
The Russian state-controlled oil firm Rosneft acquired Tomskneft, Yukos’ largest remaining production unit, for $6.8 billion at a Yukos bankruptcy auction May 3. Rosneft competed for the bid with only one other company, the relatively obscure Yuniteks, and won the asset for a mere $370 million above the initial $6.4 billion bidding price.
The purchase is a very expensive undertaking for Rosneft, which took out a large $22 billion loan to purchase Yukos assets that have been auctioned off over the past few months. In the first two large auctions, Rosneft bought back the 9.44 percent of shares in itself that Yukos had owned. Rosneft’s rival, the state-controlled natural gas giant Gazprom, won the second auction, though indirectly, by making a deal with Italy’s ENI to purchase the stake and then sell it at some point to Gazprom. Both Rosneft and Gazprom were terrified of giving up stakes to each other.
Though Rosneft took out a large loan to keep a piece of the company out of Gazprom’s hands, the gamble is not as risky as it seems. Nearly half of its loan will go directly back to Rosneft, since more than $10 billion of Yukos’ debt is owed to Rosneft.
This is not to say taking out a $12 billion loan is not a lot for the Russian oil firm, but it is gaining a new title in the process. Rosneft’s purchase of the central-Siberian-based Tomskneft officially makes Rosneft Russia’s largest oil firm, raising its production by 80.6 million barrels to 707.6 million barrels in 2007, just above the former title-holder, LUKoil, which forecast production of 700.3 million barrels in 2007. The new assets will also triple Rosneft’s annual refining capacity to around 293 million barrels.
What was noticeably missing from the auction was Rosneft’s rival, Gazprom. The energy giant had said it was more interested in this set of Yukos’s assets than any other – save the stake Yukos has had in Gazprom itself. The reason is that Gazprom has been purchasing oil assets (small fields and pipelines) in central Siberia, and Tomskneft – with its nearby refineries – would have been a perfect target in Gazprom’s regional takeover plan.
Gazprom’s absence from the auction was likely not of its own doing but was part of the Kremlin’s ongoing plan to strike a balance between its two state-controlled energy giants, Rosneft and Gazprom. Basically, Gazprom was told that it could not have the assets. President Vladimir Putin does not want Gazprom – which is much larger than Rosneft – to become any more powerful than it already is.
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