10 June 2004 00:00
Conoco moves for 25% of Lukoil OIL:
ByLine: By CAROLA HOYOS, ANDREW JACK, SHEILA MCNULTY, ARKADY OSTROVSKY and JAMES POLITI
The turmoil in Russia's oil economy is not putting off potential
investors. Russia's federal property fund, in charge of privatisation,
said it was looking to auction 7.6 per cent of Lukoil, the country's
largest oil company, this autumn. And ConocoPhillips, the third-biggest US
oil and gas company, is eyeing a stake, people close to both companies say.
While others have expressed interest, James Mulva, Conoco's president
and chief executive officer, is said to be working the hardest of all the
western oil companies' executives to secure those shares.
The final decision about the timing and the method of selling the stake will
be made by the government, possibly as early as next week. Kirill Tomashchuk,
the acting head of the property fund, said it proposed to sell the shares as
a single stake in an auction.
Selling the shares in an auction rather than placing them in the equity
market would allow Conoco to compete for significant stake in Lukoil.
Conoco is believed to have expressed strong interest in buying the stake
during last week's meeting between Mr Mulva and German Gref,
Russia's minister for trade and economic development.
Investment bankers said Conoco was separately talking to Lukoil's
managers about buying some of their shares to increase the stake to 25 per
cent, which would give it a seat on the board of directors. At current market
capitalisation of Dollars 23bn, 25 per cent of Lukoil would be valued at
Dollars 5.75bn.
However, some oil executives have told the FT that Lukoil executives remain
reluctant to cede too much of the company, and that any announcement could
concern joint ventures rather than an equity deal.
The interest from the US oil company comes in spite of growing nervousness
among investors about the safety of property rights in Russia.
These concerns were reinforced by the prospects of bankruptcy of Yukos,
Russia's second-largest oil company. Additional reporting by Andrew Jack
in Moscow and James Politi in New York
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