It is by far, the largest deal in the Russian oil sector, a participant of the transaction said. Gazprom paid $13.091 billion for the majority stake and another $500 million for the 3.016%. The state-controlled gas monopoly will also take over other Russian oil assets that Sibneft does not own directly, but consolidates on its balance under US GAAP. These include a 49.5% share of Slavneft and its subsidiaries (TNK-BP holds a similar stake), 36.84% of the Moscow oil refinerys voting shares and 49% of OOO Sibneft-Yugra. Gazprom intends to pay for Sibneft with a loan taken from a syndicate of banks able to finance such a transaction. It was in talks with ABN Amro and Dresdner Kleinwort Wasserstein on borrowing up to $10 billion. Recently, however, Morgan Stanley and Citigroup joined the negotiations, and the sum rose to $12 billion. Gazprom is expected to pay off part of the loan (about $5 billion) by the year-end, when the government pays it the last installment of $5.7 billion for its shares. The rest will be structured in the form of long-term bonds and loans. The deal has many aspects. Apparently, Gazprom is launching its presence on the Russian oil market. Its management has announced their intention to consolidate the gas giant's oil assets in a single division, Gazpromneft, and boost oil production from 10.5 million tons annually to 35-40 million tons by 2010. "By the acquisition of Sibneft Gazprom seeks to achieve its strategic goal of becoming a global energy company, a leader on the global energy market," said Dmitry Medvedev, head of the President's administration. He specifically pointed to the transparent market terms of the deal. This has significantly contributed to solving the problem of de-privatization in a civilized way. The sale of Sibneft puts an end to one of the most controversial privatizations in Russia's extremely controversial privatization history. Al Breach, chief economist with UBS Brunswick, told The Financial Times, that the loans-for-shares privatization of 1995 was "the original sin." In his opinion, the sale of Sibneft has closed this chapter. Gazprom paid a market value for the company, which is good news for the market, he said. Quite explicably, all foreign analysts draw a parallel between Roman Abramovich and Mikhail Khodorkovsky, saying that the owner of Sibneft and Chelsea FC has received an incredibly lucrative deal. However, the Russian billionaire does not have to leave the country, as some American publications suggest. Mr. Abramovich is quite likely to remain Chukotka governor. The most important aspect in this case is that the Kremlin showed its intention to resolve property issues by financial methods and not by force. Natural Resources Minister Yuri Trutnev commented about the acquisition as follows, "On the one hand, this makes Gazprom the world's largest energy company, which positively influences the investment attractiveness of both the firm and entire Russia. On the other hand, the transaction arouses certain fears as to the efficiency of managing the new oil assets and the possibility of monopolizing the market." Still, experts do not see it as a frightening situation. "All production in producing countries is, as a rule, controlled by the state in some or other way," the Vremya Novostei daily quoted Valery Nesterov of Troika Dialog brokerage as saying. "Private investors control downstream assets. In Russia we have a transitional stage and if we are moving towards conditions in which the rest of the world lives then there is nothing to fear. Of course, private businesses are generally more efficient than state-run operations. However, it becomes a disputable issue concerning the efficient use of natural resources.” It is obvious that the management efficiency of private companies is higher than that of the state ones. However, private oil companies are inclined to boost production by "reaping the cream," which means, developing the best fields and abandoning less lucrative wells in terrible environmental conditions. The authorities are more worried about the future of the country's resources than about efficient, but wasteful development. Besides, there are arguments that refute the opinion of the all-out onslaught of the state. Vadim Kleiner, director for corporate research at Hermitage Capital Management and the major critic of Gazprom's management, says that "the nationalization of the oil industry today reminds one of a room with two entrances: on the one hand, state-owned companies buy private assets, but on the other, there is a reversed process – Gazprom plans to remove the ring fence around its shares, and Rosneft plans to put up 49% of its shares for an IPO." Foreign analysts seem to be especially critical about the increased state presence (and influence) in the Russian fuel industry. Most probably, the reason is that it gives Russia a stronger position in the global energy market. With the current situation on global markets, this contributes to an increase of the country's geopolitical influence. Energy resources today, provide a geopolitical tool as important as missiles. By the way, no one thinks of privatizing nuclear arsenals – a tentative, but acceptable comparison. Next year Russia will chair the G8, which sees its global task as ensuring the world's energy security. Hence this close attention to the situation in the Russian oil industry. In other countries such a transaction would be interesting only for its financial scale. But Gazprom's purchase of Sibneft send vibrations through all spheres, from economy to geopolitics. PIN/RIA Novosti