Publication: Monitor Volume: 4 Issue: 76

Russian financier Vladimir Potanin told a press conference in Moscow yesterday that, though he thinks the government’s starting price for oil company Rosneft is “rather high,” his company remains interested in acquiring it. In so doing, Potanin seems effectively to have ensured that the sale of the oil company will go ahead in May as the government plans.

The ostensible purpose of yesterday’s press conference was to announce that Potanin is to resign from his post as president of Oneksim, Russia’s largest private bank. He is instead now to manage Interros, a holding company that will oversee Oneksimbank and Potanin’s various industrial interests. These include the world’s largest nickel producer, Norilsk Nickel, and oil interests including the Sidanko oil company. Oneksim also has substantial media interests, including a 25-percent share in the telecommunications giant Svyazinvest and a stake in the newspaper Izvestia.

Potanin did not say who would take over day-to-day oversight of Oneksim. He did, however, let drop the news that Interros is interested in taking part in both of the two big privatizations currently being planned by the Russian government. One is for another packet of shares in Svyazinvest, which Oneksim has always said it is interested in acquiring. The other is for Rosneft, Russia’s fifth largest oil company and the largest Russian oil company still wholly in state ownership. The government has invited bids for Rosneft by May 26. Under the terms of the tender, the winner must offer at least $2.1 billion for the stake and undertake to invest $400 million in Rosneft within six months.

The sale has attracted record interest and three consortiums have been formed to bid for Rosneft. One is that formed by Oneksimbank with British Petroleum. Another brings together Russia’s natural gas monopoly Gazprom, the oil company LUKoil and the Anglo-Dutch oil company Royal Dutch/Shell. The third unites Boris Berezovsky’s Sibneft with Mikhail Khodorkovsky’s Yukos group, which in January merged to form the new conglomerate, Yuksi.

When the government announced the terms of the sale last month, the Gazprom and Yuksi consortiums both declared that the government’s starting price was too high. They threatened that they would not take part unless it were lowered. (Financial Times, April 1) Their objections were brushed aside by acting Prime Minister Sergei Kirienko as transparent efforts to buy the company as cheaply as possible. Potanin said yesterday that the price was “rather high.” But he did not say that he would not consider paying it. Nor did he threaten to withdraw from the bidding unless the government reduced the price. In effect, therefore, Potanin bolstered the government’s position and seems to have ensured that the sale of Rosneft will go ahead as planned. His position is likely to provoke howls of anger from the other interested consortiums that he has broken ranks and toadied to the government.