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Shell eyes Sibir Energy stake

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Shell eyes Sibir Energy stake

Toby Shelley

Published: October 1 2008 02:23 | Last updated: October 1 2008 02:23

Royal Dutch Shell is poised to take a large stake in Sibir Energy, the Russia-focused oil group, by the end of the year.

A deal would probably involve Sibir taking full control of the two companies’ Salym oilfield 50-50 joint venture, according to a person close to the negotiations. Production at the field has reached 133,000 barrels a day.

Shell is attracted to Sibir’s downstream operations, where the smaller company shares ownership of a 240,000 barrels-a-day Moscow refinery with Gazpromneft.

Sibir has postponed plans to migrate to the main board of the London Stock Exchange in order to devote more management time to a possible Shell deal. The move to the main board is now pencilled in for June.

Sibir on Tuesday reported strong results for the six months to the end of June, with pre-tax profits up from $104m to $288m (£161m) and revenues ahead from $681m to $1.9bn.

Earnings per share more than doubled from 27.7 cents to 60.5 cents. The sharp rises were due to increased production at the Salym field, strong refining margins and higher refinery output boosted by last year’s acquisition of the Moscow Oil and Gas Company.

Henry Cameron, chief executive, on Tuesday held out the possibility of expanding into other sectors. “The current economic climate…is presenting Sibir with many opportunities in different industries at attractive prices”, he said, although he stressed that oil would remain its main focus.

Sibir shares closed 14p lower at 386½p.

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