08 June 2004 07:25
Russian investor attacks Cedric Brown gas deal
ByLine: Christopher Hope Business Correspondent
THE biggest foreign investor in Gazprom, the Russian gas giant, has attacked a lucrative gas pipeline contract with a
company chaired by Cedric Brown, the former chief executive of British Gas.
Hermitage Capital Management, the largest foreign investment fund in Russia, has prepared a 50-page dossier which it
will present to other Gazprom shareholders at meetings in Moscow, starting this week.
The fund is using the dossier to try to get its head of research, Vadim Kleiner, elected to the board of Gazprom at
the company's annual meeting in Moscow at the end of this month.
Hermitage is angered by the gas supply contract which appears to let Eural Trans Gas, chaired by Mr Brown, keep most
of the revenues and pay a relatively smaller fee to Gazprom.
The dossier, seen by The Daily Telegraph, claims that the contract to operate the pipeline between Turkmenistan and
Ukraine - the sole link between the two countries - was worth $1.19billion in revenues to Eural Trans Gas last year.
Hermitage estimates that Eural Trans Gas transported 13billion cubic metres of gas to Ukraine in 2003. After paying a
$425m leasing fee to Gazprom, Eural Trans Gas was left with net proceeds of $767m in 2003.
However, Bill Browder, the Hermitage chief executive who has forged a reputation as a campaigner for minority
shareholder rights in Russian companies, said he could see no reason why Gazprom had handed over control of the pipeline
to Eural Trans Gas.
He said: "We find it puzzling that the board of directors should allow an unaffiliate third party to assume for
itself $750m in economic benefit which we believe should be accruing directly to Gazprom."
A spokesman for Gazprom was not available for comment yesterday.
A spokesman for Eural Trans Gas said: "Eural Trans Gas plays an important role in purchasing, custom clearing
and delivering Turkmenistan natural gas to Ukraine, based on long-term contracts with Gazprom and Naftagaz
[Ukraine's state utility]."
Mr Brown was appointed chairman of Eural Trans Gas after Atlantic Caspian Resources, a small gas exploration company
which he also chaired, bought 45pc of the company in March.
The deal was remarkable because in November last year, Atlantic was facing collapse, with debts of pounds 8.15m and
cash balances of just pounds 300.
Atlantic, whose shares were suspended on the Alternative Investment Market in May last year, was saved when its
investors voted through a debt for equity swap which heavily diluted existing shareholders.
[The Daily Telegraph] |
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