10 June 2004 03:58
Report: Conoco Wants LUKoil Stake
ConocoPhillips is seeking to buy the government's 7.6 percent stake in LUKoil, Vedomosti reported Wednesday.
The U.S. oil giant appears to be aiming for a blocking stake of 25 percent plus one share in Russia's largest
oil company, the newspaper reported, citing sources close to the situation.
Conoco president and CEO James Mulva traveled to Moscow last week to meet with Economic Development and Trade
Minister German Gref, according to the Vedomosti account.
Both Conoco headquarters in Houston and the Economic Development and Trade Ministry declined to comment on the report
Wednesday.
U.S. Deputy Energy Secretary Kyle McSlarrow, in Moscow for talks on bilateral energy cooperation, said he would not
"speculate" on negotiations between two companies.
"We have encouraged, particularly U.S. companies, to approach companies in Russia looking for investment
opportunities and -- more importantly in some ways -- partnership opportunities," he said at a news conference
Wednesday.
The Russian government has yet to announce a decision on how it will sell the shares. The three options under
consideration are placing shares on a Western stock exchange; auctioning the stake in a lump sum to a single strategic
investor; or splitting up the stake and offering shares to multiple investors, Vedomosti reported.
"A final decision is expected shortly," Aton brokerage wrote in a note to clients Wednesday. "LUKoil
has been lobbying hard for a sale to a single strategic investor."
Conoco and LUKoil already have a record of past cooperation.
Conoco, which has been investing in Russia since 1990, is leading a project together with LUKoil to explore for oil
in the Arctic. In January, LUKoil bought almost 800 gas stations in the United States from Conoco.
In a note to clients, Troika Dialog said Wednesday that Conoco would probably only be interested in a blocking stake,
since anything smaller would not give the U.S. firm any influence over operations and prevent it from booking its share
of LUKoil's reserves.
"[Conoco's] strategic interest in the 7.6 percent stake would be subject to its ability to negotiate a
separate deal to acquire another 17.5 percent from the management," the note said.
The markets do not expect Conoco to accumulate a blocking stake anytime soon, said Lev Snykov, oil and gas analyst at
LUKoil's sister group, UralSib, formerly NIKoil.
But Western companies struggling with depleting reserves have looked at Russia as one of the few places where oil
fields are still up for grabs.
"LUKoil has almost three times more reserves than Conoco does -- so the purchase of a 25 percent [blocking]
stake would translate to about an 80 percent increase in proved reserve base for Conoco," said Kakha Kiknavelidze,
senior oil and gas analyst at Troika.
Yet he warned that with only rumors circulating about the deal, "we are all speculating here. This is still in
the very early stages."
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[The Moscow Times] |
RUSSIA IN FACTS
