5 May 2007 - 15:48
  • News Code: 103880

State-controlled oil firm Rosneft became Russia"s top oil producer at the stroke of a gavel on Thursday when it paid 175.70 billion rubles ($6.8 billion) at auction for a big chunk of its bankrupt rival YUKOS.

Rosneft faced little competition for YUKOS"s East Siberian assets, taking the only other bidder, the little-known Yunitex, to 6 percent over the starting price in a 36 bid race.


"The acquisition is a significant step in Rosneft"s development, which will accelerate improvements in the company"s operational and financial performance via improved vertical integration, resulting in earnings growth particularly from the attractive downstream market in Russia," it said in a statement.


The lot, the tenth chunk of YUKOS to go under the hammer, includes the Tomskneft production unit and the Angarsk and Achinsk refineries.


Rosneft jumps to No. 1


The addition of Tomskneft, which produced 230,000 barrels per day in April, means Rosneft has leapfrogged LUKOIL as Russia"s top producer, with almost 10 percent more output.


Tomskneft also bolsters Rosneft"s oil reserves, which it said last week were bigger than any other publicly-traded company"s, although U.S. giant Exxon Mobil remains number one on total hydrocarbon reserves, which include gas.


Rosneft said a reserve audit by consultants Miller and Lents as of January 1, 2006 showed Tomskneft had proven reserves of 1.077 billion barrels of oil equivalent under the Society of Petroleum Engineers classification.


But Rosneft could still overtake Exxon next week, when the other main chunk of YUKOS goes on sale, including its Samaraneftegas production unit and a group of nearby refineries.


The addition of Angarsk and Achinsk, which can refine over 500,000 bpd, has already massively beefed up Rosneft"s very thin refining capabilities, tripling capacity at a stroke.






Rosneft was always tipped to win Thursday"s auction but analysts suspected its fellow state-controlled energy firm, gas monopoly Gazprom, also wanted the assets and might use indirect methods such as an option agreement to buy them.


But Rosneft"s statement made no mention of any intention to share the spoils of the auction with other parties.


Rosneft"s shares were up 1.75 percent at 223.84 rubles at 1:39 p.m. GMT.


YUKOS" former owners have described its destruction as a Kremlin plot. The former owners include Mikhail Khodorkovsky, once Russia"s richest man, who is now serving an eight-year jail sentence in Siberia for fraud and tax evasion.


Many shareholders say the state wanted to neutralize Khodorkovsky as a political force and seized his huge oil empire illegally, effectively renationalizing it via the auctions.


YUKOS"s main shareholder, GML, which regards the auctions as sales of stolen goods, said the assets were grossly undervalued.


"We value it closer to $20 billion rather than the $6.8 billion it went for," a GML spokesman said.


"YUKOS clearly didn"t need to go bankrupt."



News Code 103880

Your Comment

You are replying to: .
3 + 5 =