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Daily Telegraph: Sibir wins £460m Moscow deal

By Roland Gribben
Last Updated: 12:52am BST 25/08/2007

Sibir Energy has ended a politically tortuous nine-year negotiating saga to buy the City of Moscow’s energy assets and add a refinery to strengthen its presence in Russia.

The Aim-listed company is paying $922m (£460m) in cash and shares to gain control of the 240,000-barrel-a-day refinery and 139 filling stations in the run-up to acquiring production assets in Russia and achieving a full London market listing next year. The shares jumped 43 to 525p.

The deal is seen as a prelude to a strategic tie-up with Gazprom, the Russian gas giant, which has been involved in a long-running dispute over dividend payments and control of the refinery. Henry Cameron, Sibir chief executive, is confident about hammering out a settlement and smoothing relations.

Both Sibir and the City of Moscow declared the refinery deal was in line with Kremlin policy to consolidate Russia’s natural resources and described the agreement as the “first step towards the creation of another large, vertically integrated oil company with the participation of state oil companies”.

Sibir, although 50pc owned by Russian interests, has been patiently piloting its way through the Russian energy minefield to avoid the traps that have restricted Shell and BP operations.

Mr Cameron began negotiations over the refinery deal in 1998 to ease regulations that limit crude exports to 40pc of its Russian output, currently running at 53,500 barrels a day and set to double in the next 18 months.

Holdings of Russian investors in Sibir will rise to 65pc after the deal and their influence should provide a stronger platform for expansion at a time when the state’s influence over energy assets continues to grow..

Russia is considering setting up a new state oil group to accelerate energy nationalism as it raises the stakes in the drive for control of Arctic energy assets. Reports from Moscow yesterday pointed to using Rosneftegas, a state holding company which owns 75pc of Rosneft and 10.7pc of Gazprom as the vehicle for a new group which would account for 35pc of Russian output.

BP indicated yesterday it is ready to invest in developing the huge gas reserves in Turkmenistan as doubts were raised over its plans for a $3.8bn expansion of its refinery in Whiting, Indiana, because of environmental problems

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/08/25/cnsibir125.xml

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