Publication: Prism Volume: 6 Issue: 1

By Sergei Kolchin

While former President Boris Yeltsin was taking offense at his “friend Bill” for failing to understand Russia’s actions in Chechnya, about which he spoke in no uncertain terms at the signing of the treaty with Belarus and during his visit to China, the presidents of Russia’s oil companies, conversely, were beginning to find a common language with their Western colleagues. The first indications of this came from the well-known international tycoon Kenneth Dart. His representatives reported that he had sold his shares in Yukos subsidiaries. Up until that point Dart, who had rallied around him the small shareholders of Yuganskneftegaz, Samaraneftegaz and Tomskneft, had actively opposed the consolidation of the holding, blocking the decisions that Yukos wanted. It should be pointed out that despite this, extra shares were issued in Samaraneftegaz and Yuganskneftegaz in October and November, and the stake of small investors in these companies was more than halved. According to the influential Financial Times, it was this that prompted Dart to sell his shares at a price that suited Yukos’ owners. On top of this, the two sides agreed not to unleash an “information war” against each other. The size of the holdings sold by Dart was not revealed, and they were bought up by Cypriot offshore companies controlled by Yukos.

The second East-West deal was even more important in the context of a new stage in the “oil wars.” The shareholders of the Tyumen Oil Company (TNK) and the co-owners of Sidanko, notably BP-Amoco, agreed a settlement at the end of December whereby the oil producing company Chernogorneft would be transferred to Sidanko, and the owners of TNK–Alfa-group and Renova–would receive a blocking stake in the holding. Chernogorneft, which had been bought by TNK, will be transferred to Sidanko debt-free with all its licenses and property. The funds which TNK spent on settling Chernogorneft’s debts will be taken into consideration in the placing of Sidanko share issues to favor TNK shareholders, and TNK will receive seats on the board of directors of Sidanko, though it will not be involved in managing the company’s operations. For its part, BP-Amoco intends to participate in setting up a joint venture with TNK to develop the Samotlor oil field. As for Sidanko’s other subsidiary, Kondpetroleum, its fate has not yet been decided. It is unlikely that the new partners will want to develop two technically challenging fields–Samotlor and Krasnoleninsk–at the same time. TNK will probably make do for now with securing ownership of Kondpetroleum and settling the debts it owes to Sidanko. The settlement between the companies has not yet brought TNK any closer to getting the credit from the United States’ ExImbank which was frozen because of differences between Russia and the Americans over the war in Chechnya.

At the end of December there was another important event affecting TNK’s fate. Despite the doubts surrounding it, a competitive sale of 49.8 percent of the company’s shares was held. The winner was ZAO Novye Prioriteta, backed by the well known alliance of Alfa Group-Renova, who paid US$90 million. There were three other bids: from Azia-Neft for US$67 million, ZAO Evro-TEK for US$71 million and ZAO Akorp-Servis for US$86 million dollars. In fact, Alfa Group-Renova’s main rival was the Sintez corporation. The victory of TNK’s new owners in the competition may be seen as the result of an understanding. Notably, the head of Sintez, Leonid Lebedev, said: “For me this is neither a defeat nor a misfortune. We are quite happy with the victory of TNK’s shareholders; it would have been far worse had some unknown company won.” At the same time, Interros, headed by Potanin, satisfied by the settlement between TNK and Sidanko, withdrew its objections to the competition.