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The Times: Oil explorer may become Kremlin target after upgrading reserves

EXTRACT: Mr Mitvol is best known for forcing Shell to cede a majority stake in the Sakhalin II project to Gazprom.

April 30, 2007
Steve Hawkes

Urals Energy, the oil and gas explorer listed in London, will risk the wrath of Oleg Mitvol, the Russian environmental regulator, today by revealing a spectacular 400 per cent upgrade in its estimated reserves in the country.

A report by the American experts DeGolyer and MacNaughton claims the upgrade means that the company could be worth almost double its present £500 million market capitalisation.

Urals’ new reserve figure — of 577 million barrels of 2P proven and probable oil and gas — follows the acquisition of the Dulisma field in Eastern Siberia last year.

It will come as Urals unveils Boris Yeltsin’s former son-in-law as its new chief executive. Leonid Y. Dyachenko, 41, an executive board member since Urals was set up in 2003, will replace Bill Thomas, the former Amoco executive.

Two weeks ago Mr Mitvol tore into Imperial Energy, a rival of Urals, sparking a 25 per cent share price fall, challenging the findings of a reserves upgrade carried out by DeGolyer and MacNaughton and released by Imperial last month. He said that the figure had been falsified, threatened to revoke Imperial’s production licence and rounded on Western independents operating in Russia as “artificial, puffed-up shell firms”.

Urals was one of 16 other companies that he claimed his department would be investigating. Analysts said that the attack could herald a push by the Kremlin to bring smaller foreign explorers under Russian control.

Mr Mitvol is best known for forcing Shell to cede a majority stake in the Sakhalin II project to Gazprom.

http://business.timesonline.co.uk/tol/business/industry_sectors/natural_resources/article1723007.ece

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