WILL THE NEXT POTANIN – BEREZOVSKY BATTLE BE OVER BELARUS?

The privatization of the Slavneft Oil Company could be the next prize contested by the financial-industrial groups led by former Russian Security Council deputy secretary Boris Berezovsky and former deputy prime minister Vladimir Potanin. (Moskovskie novosti, October 20) The fact that Slavneft is jointly owned by the Russian (83 percent) and Belarusan (17 percent) governments suggests that the sale would require the approval of Belarusan president Alyaksandr Lukashenka.

According to officials in Russia’s Energy Ministry and State Property Committee, 60 percent of Slavneft’s equity is to be sold for $200 million as part of Russia’s energy privatization program during the first half of 1998. Although Slavneft is not one of Russia’s largest oil companies, this valuation seems quite low in light of the facts that: 1) Slavneft is Russia’s only transnational oil company; 2) it has acquired a majority stake in Belarus’s highly attractive Mozyr Oil Refinery, the westernmost enterprise from which Russian oil products can be exported (via pipeline through Belarus) to Europe; and 3) Slavneft is preparing to take equity positions in Belarusan retail oil firms located in the Brest and Gomel oblasts.

The stage could therefore be set for another pitched battle between the Russian industrial groups that clashed earlier this year over the disputed privatizations of the Svyazinvest telecommunications holding company and the Norilsk Nickel mining complex. Both tenders were won by Potanin’s Oneksimbank, and the circumstances surrounding the Svyazinvest sale were sufficiently suspicious to precipitate the subsequent resignation of State Property Committee head Alfred Kokh. Potanin’s interest in Slavneft was apparent during his visit to Belarus earlier this fall, when he signed a series of agreements with Lukashenka. Oneksimbank also owns 51 percent of the Sidanko oil firm and a number of petrochemical companies. Berezovsky’s National Oil Corporation, likewise, owns 51 percent of the Sibneft oil company (whose oil deposits in Western Siberia are close to Slavneft’s), and Berezovsky is thought to have used his tenure on the Security Council to strengthen his influence in Rosneft, Russia’s largest state-controlled oil firm (which is also slated for privatization).

In the end, however, the battle between Potanin and Berezovsky could well be decided by Lukashenka, who, as Belarusan president, can nix or approve the sale of Belarus’s 17 percent equity stake. In any case, Slavneft’s privatization is likely to produce a much-needed injection of Russian capital for the Belarusan economy.

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