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Sibneft ready to pay big dividend

FINANCIAL TIMES: Sibneft ready to pay big dividend

“A spokesman said Shell had made “substantial progress” towards agreeing principles under which Gazprom could enter Sakhalin-2 in return for Shell participating in Gazprom’s Zapolyarnoye project in western Siberia.”

Tuesday 5 July 2005

By Neil Buckley in Moscow and Thomas Catan in London

Published: July 5 2005

Sibneft said yesterday it was recommending a record $2.29bn dividend for 2004, amid increasing signs that Roman Abramovich’s oil company may change hands.

Shares of Russia’s fifth-largest crude producer gained 2.2 per cent on news of the big pay-out. Sibneft had previously said it would pay no dividend before resolving efforts to reclaim 34.5 per cent of its shares held by the beleaguered Yukos oil group since their failed 2003 merger.

Since Sibneft last proposed a record $1.3bn dividend a month before unveiling the Yukos merger plan, yesterday’s move stoked speculation that Mr Abramovich was set to sell his 57 per cent stake.

It came as a Russian newspaper reported that Gazprom, the state- controlled gas monopoly, was vying with Rosneft, the Russian state-owned oil group, for control of Sibneft.

Kommersant said Gazprom could sign an $8bn deal to buy Mr Abramovich’s stake this week. It added that Gazprom might team up with Royal Dutch/Shell to execute the deal, and later include Sibneft assets in an asset swap with the newly-unified oil major.

But the newspaper said Rosneft was attempting to get hold of Yukos’s 34.5 per cent Sibneft stake, and build a controlling stake by buying additional shares from partners of Mr Abramovich.

Sibneft dismissed the report as speculation. “Every day someone comes up with a rumour about someone wanting to buy us,” a spokesman said. “The focus among the management is on Sibneft as a stand-alone company.”

Mr Abramovich, however, is believed to want to divest his Russian interests and invest in a less politically sensitive environment. Gazprom, meanwhile, is receiving $6.35bn in cash after the government increased its stake from 38 to 51 per cent in a move towards lifting restrictions on foreign ownership of remaining shares.

“You have a series of events which look suspiciously precisely timed,” said Steven Dashevsky, analyst at Aton Capital in Moscow. “[Sibneft] may be preparing to sell itself with a clean bank account.”

Gazprom declined to comment on any Sibneft link-up but said it had made clear its ambition to acquire oil assets and was “looking at a wide range of opportunities”. Analysts said any Gazprom-Sibneft deal faced significant hurdles.

Allowing Mr Abramovich to walk away from Sibneft with $8bn in cash could be politically difficult for Russia’s president, Vladimir Putin. A battle between Gazprom and Rosneft for Sibneft could also delay any deal.

Gazprom had been due to merge with Rosneft in a transaction blessed by Mr Putin. The merger was shelved after Rosneft fought vigorously to remain independent.

Royal Dutch/Shell said it could not comment on “market rumours or speculation”. But the company has previously made public its interest in bringing Gazprom into the massive Sakhalin-2 project in Russia’s far east, of which it is a 55 per cent owner.

A spokesman said Shell had made “substantial progress” towards agreeing principles under which Gazprom could enter Sakhalin-2 in return for Shell participating in Gazprom’s Zapolyarnoye project in western Siberia.

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