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Shell in talks with Sibir on swap deal

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Shell in talks with Sibir on swap deal

By Sylvia Pfeifer

Published: August 3 2008 18:44 | Last updated: August 3 2008 18:45

Royal Dutch Shell is in talks with smaller rival Sibir Energy about an asset swap that could see the oil major emerge with a large stake in the Russian-focused group.

The two companies are equal partners in the Salym fields in eastern Siberia. Under the proposal, Shell would swap its 50 per cent stake in the fields for an equity holding in Sibir itself.

People close to the talks last night cautioned that the discussions had been going on for several months and there was no guarantee they would be successful. Sibir declined to comment.

Sibir, whose biggest shareholder is the billionaire Shalva Chigirinsky, is the largest company on London’s Aim, with a market value of £2.3bn. It last month reported a trebling of full-year pre-tax profits to $344m (£174m) and said it hoped to migrate to the FTSE?100 index later this year.

At the time, the company said it still hoped to resolve a long-running dispute with Gazprom, the Russian energy group, over the control of the Moscow Refinery by the end of the year.

For Shell, the proposed asset swap would allow it to retain an economic interest in the Salym developments while distancing itself from operations on the ground.

Two years ago, the company was forced to surrender control of the huge Sakhalin-II oil field to Gazprom in what was seen as part of a wider move by the Kremlin to renationalise its resource assets.

Meanwhile, rival BP is still locked in a dispute over the control of its Russian joint venture, TNK-BP.

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Copyright The Financial Times Limited 2008

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