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Total frustration

Financial Times: Total frustration

By Brian Groom

Published: May 5 2005

When Total announced last year it was acquiring 25 per cent of Novatek, Russia’s biggest independent gas producer, the French oil major was applauded for making a smart move.

A few weeks earlier, Total boss Thierry Desmarest scotched speculation he was interested in bidding for Anglo-Dutch rival Shell. He also flirted with Sibneft, one of Russia’s biggest oil companies, but prudence prevailed.

He decided not to follow the example of BP, which paid the year before $7bn for a 50 per cent stake in TNK, Russia’s third-largest energy group. Instead, he went for a smaller target, investing $1bn for a blocking minority in Novatek.

Though a minnow compared with Gazprom, Novatek is one of the fastest growing and most profitable Russian energy companies. It has the added advantage of being one of the few Russian groups not owned by oligarchs. In short, it should have been a pretty straightforward deal.

That was reckoning without Russia’s arcane bureaucracy and political system. Total yesterday said it was still waiting for clearance from the Russian antitrust authorities to close the transaction.

The French are all the more frustrated because the regulator promised an answer by the beginning of April. They are also puzzled by the delay considering Novatek only has a 4 per cent market share of Russian gas.

Without the deal, Total risks missing its 4 per cent average annual production growth targets. As for Russia, it does little to enhance the credibility of Vladimir Putin’s new business-friendly approach. and its sister websites,,,,, and are all owned by John Donovan. There is also a Wikipedia article.

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