The Moscow Times: Gazprom-Linked Firm Makes Yukos Bid

EXTRACT: President Vladimir Putin has since made it clear that Russian companies will have a controlling stake in all major energy projects, a point driven home when Shell and its Japanese partners handed over a controlling stake in the Sakhalin-2 oil and gas project to Gazprom last month after prolonged state pressure.

THE ARTICLE

Monday, January 29, 2007. Page 1.
By Miriam Elder
Staff Writer

ESN, an investment firm with close links to Gazprom, stepped forward Friday as the first candidate to bid in the upcoming auctions for Yukos assets.

Energogaz, an ESN holding, applied to the Federal Anti-Monopoly Service last month for approval to bid for assets of the bankrupt oil firm, ESN spokesman Marianna Belusova said. She declined to say in which assets ESN was interested.

Yukos’ remaining assets, which include refineries and two oil production units, are due to be sold off this year. The company’s bankruptcy receiver said last week that a final valuation of the assets was expected in early February, after which open auctions can go ahead. Initial valuations estimated the assets at more than $22 billion.

ESN leads a consortium comprising Italy’s Eni and Enel that has said it was interested in bidding for Yukos gas assets, including Arcticgaz, a gas exploration and production unit.

Italy’s top energy firm, Eni, signed a wide-ranging cooperation agreement with Gazprom last year, allowing Gazprom to sell gas directly to Italy and extending supply contracts to 2035. Utility group Enel, meanwhile, has steadily invested in the country’s electricity sector and is widely believed to have bought a stake in OGK-5 when the utility was spun off from monopoly Unified Energy Systems last year.
 
President Vladimir Putin last week praised growing energy ties between the two countries during a meeting with Italian Prime Minister Romano Prodi in Sochi.

Given its close links to all the firms involved, Gazprom could use the ESN bid as a proxy for its own interest in Yukos assets while avoiding legal risks, analysts said.

Gazprom could not immediately be reached for comment Friday.

ESN, with holdings ranging from energy to the media, is headed by investor Grigory Beryozkin, who sold 5.3 percent of UES’ stock to Gazprom in 2004. Russian media reported at the time that ESN had bought the stake initially on Gazprom’s behalf.

Gazprom withdrew its bid for Yukos’ main production unit, Yuganskneftegaz, at the last minute in a December 2004 auction following a legal injunction by a U.S. court. Yuganskneftegaz went to state-controlled firm Rosneft instead. In May 2005, a planned merger between Gazprom and Rosneft was called off.

“After Gazprom had to withdraw its bid for Yuganskneftegaz, it realized it didn’t have a Plan B,” said Steven Dashevsky, an analyst at Aton brokerage. “It has learned its lesson.”

Gazprom and Rosneft have signed a series of agreements in recent months aimed at increasing cooperation between the two companies ahead of the Yukos auctions. But analysts said the two firms could still come to blows over certain assets.

Both companies appear to be interested in Samaraneftegaz and Tomskneft, the two main oil production units up for auction. Rosneft is keen to scoop up Yukos refineries, while Gazprom is likely to buy the 20 percent stake that Yukos owns in its oil arm, Gazprom Neft, formerly known as Sibneft. The stake is a holdover from Yukos’ share in Sibneft, which Gazprom bought for $13 billion from Roman Abramovich in September 2005. Yukos also holds a 9.4 percent stake in Rosneft, which is due to be auctioned off.

Rosneft is close to drawing on $24.5 billion in loans from a consortium of eight international banks to fund its acquisition of Yukos assets, a banking source said Friday.

“It’s all been agreed. It’s now up to them to decide when to draw,” the source said. “We expect that to happen over the next four weeks.”

The source declined to provide details into the types of loan that would be provided. ABN, Barclays, BNP Paribas, Citigroup, Credit Agricole’s Calyon, Goldman Sachs, JPMorgan Chase and Morgan Stanley are due to provide the loan.

Reuters reported Friday that each bank would provide $3 billion and that the financing package would pay 30 to 50 basis points above the London Interbank Offered Rate with a maturity of five years. The loan would include a eurobond portion carrying a maturity of 10 years, the news agency said, quoting an unidentified banking source.

Rosneft spokesman Nikolai Manvelov on Friday declined to say when the loan would be drawn or in which Yukos assets the company was interested.

“Above all, Rosneft is interested in money as a Yukos creditor,” he said. “If it doesn’t get money, it will start looking at other options.”

To meet Yukos’ total liabilities, including back tax demands of $26.6 billion, the state-appointed receiver plans to sell off 193 assets in open auctions this year.

Rosneft and the Federal Tax Service are among Yukos’ main creditors. Yukos was declared bankrupt in August, ringing the death knell for what was once the country’s biggest oil producer before it faced a barrage of tax claims that added up to $33 billion.

The Kremlin’s legal onslaught against Yukos came amid speculation that majority owner Mikhail Khodorkovsky was close to selling a stake in the company to a U.S. oil major.

President Vladimir Putin has since made it clear that Russian companies will have a controlling stake in all major energy projects, a point driven home when Shell and its Japanese partners handed over a controlling stake in the Sakhalin-2 oil and gas project to Gazprom last month after prolonged state pressure.

http://www.themoscowtimes.com/stories/2007/01/29/003.html

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