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Financial Times: Gazprom considers Timan and Imperial Energy

By Dino Mahtani in London and Catherine Belton in Moscow
Published: November 13 2007 04:07 | Last updated: November 13 2007 04:07

Gazprom, Russia’s state-owned energy company, is considering taking equity stakes in two London-listed oil companies that had hitherto faced problems with government regulators.

Timan Oil and Gas, the Aim-listed company with assets in Russia, announced last Thursday that it had signed a non-binding memorandum of understanding with Zapsibgazprom, a Gazprom subsidiary. Under the deal, Zapsibgazprom could invest up to $500m (£242m) in Timan’s oil fields. It also left open the possibility of Zapsibgazprom acquiring some of Timan’s shares.

The announcement came a day after Imperial Energy, also listed in London but with assets in Russia, said it had been approached by Gazprombank, the authorised bank for Gazprom, with an offer for 25 per cent of its shares.

Both companies have had problems with Russian authorities. Analysts claim the discussions with entities linked to Gazprom reflect a rising trend in Russia, where companies that operate there need state-friendly Russian partners to survive.

Some small companies operating in Russia have made good returns for shareholders from their assets, but have been helped by overcoming regulatory difficulties. One person close to Imperial said Gazprom could give the company protection, following accusations by another agency in the ministry of natural resources that the company was exaggerating its reserves.

Rosprirodnazor, the agency notorious for forcing Royal Dutch Shell to give a majority share of its Sakhalin-2 project to Gazprom, attacked Imperial for exaggerating reserves. In September, Oleg Mitvol, deputy director of Rosprirodnazor, clashed with Imperial by issuing a statement that the company called “materially misleading”, and that had forced its share price down.

Last month, a Russian court upheld a claim on an oilfield by Timan. The company had challenged a ruling by Rosnedra, an agency within Russia’s natural resources ministry, which had delayed one of Timan’s exploration licences.

However, Alexander Kapalin, Timan’s chief executive, said the court victory had had little to do with the Gazprom proposal. “We always had a strong legal position, this is why we have raised capital and always got our auditors to sign off,” he said.

Gazprom said it was not interested in Imperial, and that Gazprombank’s bid was one of “hundreds” of such proposals made by Gazprombank.

Copyright The Financial Times Limited 2007

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