Shell in talks on Urals Energy field unit – report
- Reuters
- Thursday October 2 2008
MOSCOW, Oct 2 (Reuters) – Russian mid-sized oil firm Urals Energy is seeking Royal Dutch Shell as a partner for a giant East Siberian field, a Russian newspaper reported on Thursday.
Shell was in talks with London-listed Urals to buy at least 50 percent in its Taas Yuriakh oil production unit, which owns a licence for the Mid-Botuobinsky deposit with reserves of 98 million tonnes of oil, Kommersant business daily quoted market sources as saying.
The deal may cost Shell $1.7 billion, it said. Neither Shell nor Urals would comment on the report.
Renaissance Capital brokerage said in a research note on Thursday it was worried by the debt position of Urals, which has net debt of $602 million and a market capitalisation of $119 million.
“Urals Energy’s financial position has concerned us since the last year; we believe that only a friendly deal with Sberbank could support the company’s activities,” RenCap said in the note. “These concerns are especially serious in the present environment of a liquidity crisis in the global financial markets,” it added.
Urals said on Tuesday that it was in talks with Russia’s largest lender, state-controlled Sberbank, on the extension of an initial one-year maturity of two loans provided by the bank, for $500 million and $130 million, by two and five years respectively.
It also said it hoped Sberbank would provide it with another loan for $140 million.
Urals, whose owners include Leonid Dyachenko, the former son-in-law of Russia’s late ex-president Boris Yeltsin, has also cut its oil production forecast for 2012 and 2015 by 3 and 12 percent to 56,000 bpd and 67,000 bpd respectively, which RenCap said was also worrying.
Another Russia-focused London-listed oil firm, Sibir Energy , said earlier this week it was in talks with Shell, “about a deal which would expand Shell’s business in Russia”.
British media has reported that the deal might involve Shell swapping its stake in its 50/50 Siberian-based joint venture with Sibir, Salym Petroleum Development (SPD), for an equity holding in Sibir itself.
Shell has been trying to improve its position in Russia, after it had to cede control of major offshore project Sakhalin-2 to state-controlled Gazprom last year. Shell now owns 27.5 percent of Sakhalin-2, which is on the Russian Pacific island of the same name.
Shell also plans to develop heavy oil deposits in the Volga region of Tatarstan jointly with mid-sized oil firm Tatneft.
(Reporting by Tanya Mosolova; Editing by Jon Loades-Carter)
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