02 June 2004 08:17
Gazprom Keen on Buying Yukos Assets
Gazprom plans significant expansion into oil production and is prepared to bid for Yukos assets should the oil major
go bankrupt, top executives at the gas giant said Tuesday.
"Until now we have been focusing on natural gas production. But the situation is to change," CEO Alexei
Miller told the German business daily Handelsblatt on Tuesday. "Already this year we will make firm decisions that
would allow us to considerably increase [oil] output ... And to do this we will create a subsidiary company."
Gazprom plans to boost its oil output from 10 million tons per year currently to up to 40 million tons per year in
the next few years, Miller told the newspaper.
He also said that Gazprom plans to create a subsidiary especially to edge into the domestic oil sector.
Entering the oil sector means that Gazprom also might start shopping for oil-producing assets, including those
currently controlled by embattled Yukos, Vlada Rusakova, head of Gazprom's strategic development department, told
reporters Tuesday.
"If Yukos assets are to be sold, we will look into bidding for them as long as the terms are acceptable,"
Rusakova said.
Her comments appear to have contributed to the sharp drop in Yukos' share price Tuesday afternoon, with the oil
major's stock losing 10.6 percent and closing below $7.
Usually tightlipped Gazprom executives have raised expectations that the firm will abandon the company's
two-tier share trading system, which prohibits foreigners from buying company shares at low domestic prices.
"We need one share market -- not two -- and a single valuation of Gazprom. The valuation of Gazprom will rise
significantly through the liberalization," Miller told Handelsblatt.
The government holds 38.37 percent of Gazprom and has said it wants to boost the state's stake to a controlling
majority of at least 50 percent plus one share before lifting the so-called ring fence.
It is still unclear how the state can achieve this goal.
If shares are traded on the market, the government would need to cough up $5 billion to gain a controlling majority,
said Olga Pavlova, head of Gazprom's department of property management and corporate relations.
"Gazprom's subsidiaries currently hold a 16.5 percent stake in Gazprom. Potentially these shares could be
put up for sale and subsequently bought by the state," Pavlova said.
The high price tag suggests it is unlikely that the ring fence system will come down this year.
Meanwhile, the company has plans to push ahead its gas business. Gazprom is considering building a new gas pipeline
to the Yamal peninsula, said deputy chairman of the board Alexander Ananenkov.
He said the firm is looking into ways to attract financing for pipelines from independent gas producers, whose share
of production is expected to grow. Russia will produce 730 billion cubic meters of natural gas per year by 2020, the
company said, with Gazprom providing 590 bcm, or 80 percent, and independent producers the rest.
In 2003 Gazprom produced 540 bcm of natural and associated gas, or 87 percent of Russia's total output of 620
bcm.
Gazprom invests an average of 50 billion rubles ($1.7 billion) per year into refurbishing the existing gas
transportation system, Ananenkov said, and will continue doing so until 2007.
Gazprom also said it plans to increase its share of Israel's gas market from the current 1 percent to 25 percent
by 2025.
The firm is in talks to participate in construction of the country's gas distribution system.
Most likely gas will be supplied through Turkey via the Blue Stream pipeline, the company said, though other options
-- including the delivery of liquefied natural gas -- will be studied.
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[The Moscow Times] |
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