07.12.2005 9:46 [Neftegaz.ru] - Gazprom, which earlier declared its interest in oil and gas production on the Sakhalin shelf, may soon obtain first operating licenses in the region, Russian business daily Kommersant reported. the purchase of TNK Sakhalin, the holder of the geological exploration license for the Lopukhovksy ground. Sibneft is negotiating with TNK-BP to acquire TNK Sakhalin, operator of the Lopukhovsky ground of the Sakhalin shelf. TNK-BP explained their willingness to sell the company by a need to review their assets but would not comment on details of the deal. Gazprom, owner of 75.6 percent in Sibneft, refrain from comments yesterday. Probable reserves of the Lopukhovsky ground are estimated at 130 million metric tons of oil and 500 billion cu. meters of gas. TNK-BP obtained a 5-year exploration license in 2002 and was set to put $60 million into the project and later attract foreign investors to boost the sum to $4 billion if it obtained a commercial license. Informed sources of Kommersant state that TNK-BP decides to sell TNK Sakhalin after “officials made a broad hint that BP’s chances to get a commercial license are outside”. Gazprom as a state-controlled company will not have these problems, the source claims.

MOSCOW, December 6 (RIA Novosti) - Russian energy giant Gazprom will spend $2.2 billion on the company's underground natural gas storage system in Russia from 2005-2010, the head of Gazprom's Gas Transportation, Underground Storage and Utilization Department said Tuesday. Bogdan Budzulyak said $1.8 billion would be spent on creating an underground technical complex, and $400 on exploration drilling. Budzulyak said through the program, named Program 700, the company's underground gas storage capacity would reach 700 million cubic meters per day during storage season. The program is part of the overall plan for developing the gas sector up to 2030. In order to implement Program 700, investment will need to be more than doubled compared to expenditures for 2005, Budzulyak said. Reserves totaling 62.6 billion cu m were stored in Gazprom's underground system in advance of the fall-winter season 2005-2006, the official said. The previous year, this figure was 62.5 billion cu m, with an average daily usage rate from December-February of 470.5 million cu m. By 2030, the volume of gas in the underground system will total 110 billion cu m, with a maximum daily usage capacity of more than 1 billion cu m.

11-10-2005 RBC News - Russia's economy ministry has sent documents needed for the liberalization of Gazprom's share market to the ministry of justice of the Russian Federation, the economy ministry's press service told RBC. After the justice ministry registers those documents, the economy ministry will send them to the Russian government. The State Duma committee for energy, transport and communications will meet on November 16 to discuss amendments to the law "On gas supplies." The amendments lift a 20 percent restriction on foreign ownership of Gazprom's shares. The bill also confirms that the government holds a controlling stake of 50 percent plus one share in Gazprom. Liberalization of Gazprom's share market means the lifting of existing restrictions on trade in its shares. Gazprom's shares are currently traded on four stock exchanges, the largest number of operations taking place on the St. Petersburg stock exchange. Gazprom's internal and external market are isolated from each other, and foreign investors can only purchase Gazprom shares (within the 20 percent quota) in the form of ADRs, and they cannot perform operations with the company's stock on Russia's domestic market. The liberalization process is expected to be complete by the end of this year.

MOSCOW, November 9 (RIA Novosti commentator Peter Lavelle) - Gazprom's management board met on Tuesday to approve key draft financial documents for 2006-2008. The company plans to produce 548 billion cubic meters of natural gas and export 196 billion cubic meters next year, representing a 1.8% year-on-year production decline. The company intends to borrow $3.2 billion annually over 2006-2008. Gazprom's 2006 investment program envisages total investments of $10.6 billion and capital expenditures of $9.5 billion, an improvement over 2005 capital expenditures of $8.4 billion. The increase in capital expenditures includes the launch of construction of the North European gas pipeline, as well as general spending on the modernization and expansion of Gazprom's gas transportation network. The company also plans to maintain its cost optimization program, and expects total savings of $400 million in 2006, $300 million in 2007, and $3 billion in 2008. This trend is in line with Gazprom's earlier plans.

On Tuesday, Nov. 8, Turkmen President Saparmurad Niyazov, Russian Special Presidential Envoy for International Energy Cooperation Igor Yusufov and Gazprom Deputy CEO Alexander Ryazanov discussed cooperation in the oil and gas sphere in Ashgabat.

November 8, 2005 Reuters - State oil firm Rosneft plans to swap minority stakes in its subsidiaries for shares in the parent company mostly at a big discount to current market prices, Vedomosti reported on Monday. The newspaper cited documents for the board meeting of Rosneft, which will be discussing consolidation of minority stakes on Nov 9. Rosneft declined to comment on the report. Consolidation is the first step ahead of an initial public offering of Rosneft shares, which the government plans for next year. Government officials have said they could sell up to 15 percent of Rosneft to a trade buyer and up to 30 percent in an IPO with the aim of keeping state control in the company at over 50 percent. On Monday, Vedomosti quoted the documents as saying Rosneft would be 35.7 percent owned by minority investors after the IPO, which will be preceded by share-swaps for stakes held by minority shareholders in affiliates. It said Rosneft consultant Deloitte and Touche had valued Rosneft at $58 billion after consolidation and valued minority stakes in its affiliates at $9.25 billion. But Rosneft's management decided to value them at less than half that amount -- $4.1 billion -- after several discounts. One of the main reasons for a lower valuation lay in how Rosneft valued preferred shares of Yugansk, formerly the key unit of the stricken oil major Yukos, Vedomosti said. Rosneft bought control of Yugansk after a forced state auction in December 2004, but Yukos still owns preferred shares in Yugansk, which Vedomosti said had been valued at $2.7 billion -- a 70 percent discount to Deloitte's valuation of ordinary shares. Yukos could therefore get 5.23 percent of Rosneft, although analysts still question whether the powerful state firm will be willing to accept such a hostile minority shareholder as Yukos, which is suing Rosneft in Russia and abroad. Vedomosti said another discount would apply to conversion of Rosneft's second-biggest oil unit, Purneftegaz, as it had been valued at 955.6 rubles per share, compared with the current market value of 1,100 rubles. Stavropolneftegaz was also valued at a big discount. One affiliate which could enjoy a premium in the planned swaps is Sakhalinmorneftegaz, where Rosneft's current president Sergei Bogdanchikov had long worked as general director and in which he had a large stake. Sakhalin's shares were valued at 467.67 rubles, compared with the current market value of 380 rubles.

08.11.2005 11:47 MSK MosNews - On Tuesday, Nov. 8, Turkmen President Saparmurad Niyazov, Russian Special Presidential Envoy for International Energy Cooperation Igor Yusufov and Gazprom Deputy CEO Alexander Ryazanov discussed cooperation in the oil and gas sphere in Ashgabat. The Turkmen presidential press service told Interfax agency that one of the key issues discussed was cooperation on the oil and gas sector — a vital sector for the economy in Turkmenistan. Yusufov and Ryazanov informed Niyazov of Russia's plans to expand its contacts, not only in the traditional gas sector, but also in the oil sector. Ryazanov, who is also president of Sibneft Oil Company which was recently bought by Russia's gas monopoly, spoke of the company's plans to take part not only in exploring and developing gas fields in Turkmenistan, but also in the joint development of oil fields. Commenting on the implementation of a Turkmen-Russian agreement dealing with cooperation in the gas sector in the period until 2028, Ryazanov said that cooperation is developing normally, and there are no disputes or unresolved issues. "We are transiting gas bought by Ukraine in Turkmenistan, there are no problems here. This year transit is being carried out as planned and may even be slightly higher. We plan to keep our promise and transit gas through Uzbekistan, Kazakhstan and Russia next year," he said. The sides also confirmed mutual interest in speeding up work on a draft convention to regulate the status of the Caspian Sea and reaching a decision that would take the national interests of all five littoral states and international norms into consideration. "We discussed the convention to regulate the status of the Caspian Sea in detail at the meeting, the position of the Russian side — which plans to put forward a new initiative so that the conditions are acceptable to all participants in the convention, and also the position of the Turkmen side in relation to Iran and Azerbaijan. We are close to finding a constructive solution to complete work on this document," the press service quoted Yusufov as saying after the meeting.

RBC, 07.11.2005, Moscow 13:32:28.YUKOS will not become the owner of a minority stake in Rosneft after the consolidation of the latter. Moreover, it may lose its stake in Yuganskneftegaz before the shares in Rosneft's subsidiaries are swapped for shares in the parent company, an analyst with Veles Capital said. YUKOS, as the owner of Yuganskneftegaz's preferred shares, which equal 23.21 percent of the company's authorized capital, may simply not be allowed to take part in the conversion of this stake into Rosneft's consolidation. Analysts with Prospect Investment say Rosneft will face serious counteraction on the part of minority shareholders, including YUKOS, in the event that the proposed conversion ratio is approved. Specialists draw attention to the fact that the state oil company plans to implement a 70 percent discount on the preferred shares in Yuganskneftegaz and a discount of 20 percent on the preferred shares in other subsidiaries.

MOSCOW, November 8 (RIA Novosti) - Russian Minister of Economic Development and Trade German Gref said Tuesday that export duties on liquefied natural gas could be abolished at the end of November or the beginning of December. "This measure is a powerful stimulant to attract various investments, foreign investments in the production of liquefied natural gas," Gref said at a meeting of the committee for protective measures in foreign trade. "We have to find out whether this measure is really necessary in order to make future projects profitable and attractive to investors," he said. "We will decide during the next meeting of the committee [at the end of November or the beginning of December]." Russian natural gas monopoly Gazprom proposed earlier to abolish LNG export duties, which are currently set at 40 euros per 1000/cu m.

02.11.2005 09:39 [Neftegaz.ru] - Russian national gas monopoly Gazprom has officially confirmed that it plans to buy Yukos's 20 percent stake of Sibneft as soon as it is unfrozen. Gazprom already owns 75.6 percent of Sibneft and has the right to make strategic decisions at the company. Gazprom intends to buy the stake for less than market price, which was $3.413 billion yesterday. The purchase of the stake will take place apparently in the second quarter of 2006 and that the purchase of the remaining 5 percent of the stock in minority shareholders' hands would take until the end of 2006. The gas producer denied to comment.

11-03-2005 RBC News - To build up the necessary reserves of natural gas in East Siberia and the Far East by 2030, $10 billion needs to be invested in geological exploration, Vladimir Sayenko, head of the state energy policy department at the industry and energy ministry's fuel and energy department, said at the "Development of Siberia's and the Far East's oil and gas sector" session of the Fifth All-Russian Week of Oil and Gas on Tuesday. Sayenko said at least 3.45 million meters had to be drilled to build up the required reserves of natural gas - 6.7 trillion cubic meters - by 2030. The industry and energy ministry was examining the potential reserves of East Siberia and the Far East with a view to preparing an effective long-term program for the development of natural gas resources in these regions, Sayenko said, noting that assessments made by the economy ministry, the natural resources ministry and other departments were insufficient. The industry and energy ministry is in talks with the Republic of Korea, China, Japan and regional administrations to determine the parameters of the internal and external markets. The ministry decided to implement its program stage by stage, developing a list of long-term commercial projects. The program targets not only the production of dry gas. A number of gas and chemical complexes would be set up in the region after 2015. As a result, the GDP of East Siberia and the Far East would increase 3.25 times by 2030 compared with 2005, and budget revenues would total $65 billion. Viktor Khristenko, the minister of industry and energy, said earlier that significant reserves and prospective resources of natural gas in East Siberia and the Far East allowed the creation of new centers of natural gas production in the area, satisfying both the needs of the domestic market and the possibility of natural gas exports. The production of natural gas in the region could increase more than ten-fold by 2015 and fifteen-fold by 2020 compared with this year. East Siberia's natural gas reserves are estimated at 6.6 trillion cubic meters, and crude oil reserves are put at 2.5 billion tons. Among the largest fields are Verkhnechonskoye, Chayadinskoye (1.24 trillion cubic meters of natural gas), Kovykta (2 trillion cubic meters of natural gas), Talakanskoye (124 million tons of crude oil and 47 billion cubic meters of natural gas), and Yurubcheno-Tokhomskoye (1.2 trillion cubic meters of natural gas and 780 million tons of crude oil). The All-Russian Week of Oil and Gas is Russia's largest oil and gas forum, held annually in Moscow with the support of the industry and energy ministry, the Federation Council upper parliament chamber, the foreign ministry, the chamber of trade and industry, the Russian Academy of Sciences, international energy organizations and the largest Russian and foreign oil and gas companies.

RBC, 02.11.2005, Moscow 18:59:22.Gazprom Finance B.V. has transferred 55.9961 percent of Sibneft shares to Gazprom, Sibneft reported. Thus, Gazprom Finance B.V. still holds control over 16.6667 percent in the oil company. Gazprom's acquisition of 72.663 percent in Sibneft was reported to have been accomplished on October 21. Gazprom Finance B.V. was registered as a Sibneft shareholder owning 72.66 percent in the oil company. Gazprom acquired 3.016 percent more in Sibneft from its subsidiary Gazprombank. The Russian gas giant controls 75.679 percent in Sibneft.

03.11.2005 11:46 MSK MosNews - Russian state-owned oil company Rosneft is likely to be valued at between $50 billion and $58 billion in its IPO valuation later this year, the head of the State Property Agency said on Wednesday, Nov. 2. "We have preliminary numbers in the range of $58 billion. Approximately $50 billion to $58 billion," Valery Nazarov was quoted by Reuters as saying. That valuation would give Rosneft, Russia's No.3 oil producer, a higher valuation than the biggest company in the sector, Lukoil, which is worth less than $50 billion. He said the final valuation for the initial public offering would be ready by late November or early December. The IPO itself would not take place before June 2006, he added. In September, as MosNews reported, Economy Minister German Gref said he supposed the government-commissioned valuation would be completed in October and the IPO would go ahead - in the best case scenario - at the end of 2006. Russia is partially privatizing Rosneft to pay for a buyback of shares in natural gas monopoly Gazprom, which will leave the state with a majority holding in both companies. The government has said the privatization will probably include the sale of an equity stake to a strategic investor as well as an IPO, which could be offered both in Russia and abroad, possibly in London, according to Gref. "Various ideas are under consideration at the moment. There will be clarification soon," Nazarov said.

SAMARA, November 2 (RIA Novosti) - Russian natural gas monopoly Gazprom's purchase of a majority stake in oil major Sibneft was wrong, former Russian premier Mikhail Kasyanov said Wednesday. "It is okay for Gazprom to buy into oil production, but it is wrong when a state-owned company seizes assets from viable private companies. I believe that the state must not place private companies under its control," Kasyanov said at a news conference in Samara. Kasyanov, who has just begun a tour of Russian regions, was dismissed as prime minister in early 2004. He is currently under investigation for alleged illegal property transactions while in office.

MOSCOW, November 1 (RIA Novosti) - The chief executives of Russian natural gas monopoly Gazprom and Canadian hydrocarbon giant Petro-Canada met in the Russian capital Tuesday to discuss the possibility of supplying liquefied natural gas (LNG) from Russia to markets in North America, Gazprom said in a press release. Gazprom CEO Alexei Miller and Petro-Canada's Ron Brenneman reviewed preliminary results of a joint feasibility study on a project to build an LNG facility outside St. Petersburg and considered progress in implementing their Memorandum of Understanding, which provides for the delivery of Russian LNG to North America. Petro-Canada is the country's largest oil and natural gas company, operating both at home and overseas. It explores, develops, and recovers hydrocarbon reserves in northwestern Europe, northern Africa, the Middle East, and Latin America. Gazprom plans to launch swap supplies of LNG to North America before the end of the year. It will continue such supplies on the basis of mid-term contracts with American companies in 2006-2009, after which it will begin direct supplies to the U.S. under long-term contracts.

27.10.2005 10:16 [Neftegaz.ru] - Russia's natural gas monopoly Gazprom intends to buy an interest in liquefied natural gas pipelines and terminals in the United States, Gazprom Deputy Chairman Alexander Medvedev on Wednesday. He said that in exchange the Russian company would allow Western energy companies to have a role in developing the Shtokman Field in the Barents Sea. "Our principle is simple. We want to be involved in all parts of the value chain," Medvedev said in the interview published in Wednesday's editions of the Houston Chronicle newspaper. "For access to our strategic reserve base, we want equal access to the downstream and midstream assets."

MOSCOW. (RIA Novosti commentator Peter Lavelle) - Viktor Khristenko, Russia's Industry and Energy Minister and a board member of the energy super-giant Gazprom, is leading a delegation of Russian business moguls to the U.S. this week. Hoping to kick-start the Russia-U.S. energy dialogue in the wake of the Yukos affair, Khristenko has a lot to offer. There can be no doubt the oilmen of Texas are keenly interested in his sales pitch. Khristenko's checklist of reasons why American and other foreign oil giants should jump on the Gazprom bandwagon is compelling: The 'ring fence', limiting foreign ownership of Gazprom shares to 20%, is about to be abolished. Even by the most conservative forecasts, the company's market capitalization will increase dramatically along with the share price, making Gazprom stock a darling of international portfolio managers. With the purchase of oil giant Sibneft for $13.1 billion earlier this month, Gazprom is now poised to be at the center of Russia's oil production expansion, and to fulfill its goal to become a fully-diversified energy company. The recent deal with Germany to start the first phase of the Northern European Pipeline through the Baltic Sea, by-passing Poland and the Baltic republics, signals that the company is tackling its decade-long hibernation period of reporting flat production and export figures, and has initiated a new and potentially very significant expansion phase. Gazprom's boe (barrels of oil equivalent) reserves are the third largest in the world, slightly behind Saudi Arabia and Iran, and ahead of Iraq and Kuwait. Gazprom's daily production (taking into account Sibneft) is equivalent to 10.3 million barrels of oil. Gazprom is now Russia's most important "national energy champion", with enormous political clout, both at home abroad. National energy champions have historically not been particularly friendly to minority shareholders or minority business partners; however, in Gazprom's case, there is reason to believe just the opposite. As Gazprom restructures itself and extends its global reach, minorities could substantially benefit from how the company rebalances its multi-layer businesses. The above is what Gazprom has to offer, but what do the company and the Kremlin want, given this very attractive investment menu? There appear to be three overriding priorities. First, to establish Russia's undisputed role and profile in international politics based on market forces, rather than on its military might or even its overall position in the world in terms of GDP. Second, for revenues generated by Gazprom (and other state-owned or state-friendly energy companies) to sustain economic growth and federal budget surpluses, in order to sustain per-capita income increases and the current consumption boom. Third, to integrate Russia's economy and businesses into the global economy. To attain the above goals and attract invest interest in Gazprom, Khristenko does not have to do much more than to explain how the current Baltic Sea and Shtokman projects were established. Namely, Gazprom will always demand majority control of 51% plus one share of equity of in any internationally-partnered project. Foreign companies possessing technical expertise that Gazprom presently does not have will be given minority stakes to develop and manage projects. Foreign companies that have a value-added end-user utility are provided with minority equity stakes. Minority partners who can get gas or petroleum products onto the market, for example Conoco, with its liquefied natural gas technology (LNG) and experience in the U.S., will be given preference. Gazprom will be willing to exchange some equity in projects to enhance its involvement in downstream sales of company products in foreign markets. Gazprom has shown that it is willing to share capital expenditure costs and net profits with foreign partners. All of the above is probably on the table as Khristenko meets with American politicians and Texas oilmen. The minister has suggested that the government is interested in developing a Murmansk pipeline terminal to supply the U.S. with LNG. The U.S. is interested in alternative sources of energy, while Russia has its investment menu and domestic concerns. Given the interests of both sides, Russia and the U.S. surely will have little problem coming to a mutually agreeable arrangement.

MOSCOW, October 26 (RIA Novosti) - Deutsche Bank has deemed fair the price at which Russian natural gas monopoly Gazprom bought a 76.6% stake in the oil company Sibneft, Gazprom said in a press release Wednesday. The press release was issued after Gazprom received an expert report from Deutsche Bank's London branch on last Friday's purchase of the Sibneft stake by the natural gas giant's Gazprom-Finance BV subsidiary. The asset was bought for $13.079 billion from Millhouse Capital, the investment vehicle of Chelsea soccer club owner Roman Abramovich.

26/10/2005 RZD News - Russian gas giant Gazprom is looking for ownership of liquefied natural gas pipes and terminals in the United States, Gazprom Deputy Chairman Alexander Medvedev told a Houston daily on Tuesday. Houston Chronicle quoted Medvedev as saying that in exchange for that ownership Gazprom was willing "to let Western energy companies participate in the development of the Shtokman Field under the Barents Sea." Medvedev was attending a Russia-U.S. energy symposium in Houston. A decision will be made this spring about which Western energy companies get to participate in developing the Shtokman project. "Our principle is simple. We want to be involved in all parts of the value chain," Medvedev said. "For access to our strategic reserve base, we want equal access to the downstream and midstream assets" in the LNG industry outside of Russia. Medvedev said site selection for a deep-water port and a natural gas liquefaction plant near Murmansk is nearly complete, reports ITAR-TASS. Natural gas from the Shtokman Field would be piped to the port, chilled until it becomes a liquid and then loaded onto special tankers that can ship it across the ocean, much like crude oil is transported, the newspaper wrote. Only the companies that were willing to help Gazprom toward its goal of being an equity owner or a capacity owner in LNG regasification terminals in the United States were short-listed for the Shtokman project, Medvedev said. Two U.S. companies - Houston-based ConocoPhillips and San Ramon, Calif.-based Chevron - are on the short list for Shtokman. Irving-based Exxon Mobil Corp. was dropped. The three other companies short-listed are France's Total, and Norwegian companies Statoil and Norsk Hydro. Medvedev said two or three companies will be selected as partners for Shtokman this spring. "We have enough gas to provide for demand everywhere," Medvedev said as quoted by the newspaper.

HOT 10-25-2005 Kommersant - U.S. businessman Spiridon Armenis went to the law against Russia's Gazprom and Itera last week. Armenis claimed the title to no less than the giant Zapolyarnoe gas field and estimated the damages at above $147 billion. Discovered in the Tazovsky Peninsula, Yamal-Nenets District, in 1965, Zapolyarnoe field has between 3.3 trillion cub m and 4 trillion cub m in gas resources. In size, it is Gazprom's third field, straight after Urengoy (5.8 trillion cub m) and Yamburgsky (4.7 trillion cub m). For Zapolyarnoe, the Cenomanian stage of commercial production started only in October 2001; industrial production of 100 billion cub m of gas on year was attained in 2004. Resident of Kentucky's London, Spiro Armenis went to the North District Court of Texas September 14, 2005, saying his Pascall International Petroleum Co. (PIPC) made a 50-year agreement for developing gas fields of the former USSR, including Zapolyarnoe, far back in November 1991. That agreement along with a raft of supplementary agreements provided for establishment of a joint venture, where PIPC would have a share. The agreements have been never implemented because of the USSR collapse. According to Armenis, in 1992, PIPS delegated authority for joint venture's creation to Greek International Energy Corporation that is allegedly affiliated to U.S. Itera International Energy Corporation (a structure of Russian Itera). Some time later, Itera transferred the title to Zapolyarnoe to Gazprom, having got other assets in return. Armenis estimates his losses at $147.38 billion (by the way, Gazprom's capitalization is around $120 billion) and insists he notified Gazprom and Itera about the multibillion claims from 2003 to 2004 but got no answer. Baker Botts LLP lawyers that stand for Gazprom in the process called the claims of Armenis at least groundless. Gazprom's representatives said the company has no doubts concerning the legitimacy of Zapolyarnoe title. In Itera, they say the company has never had any bearing on Zapolyarnoe.

Oct. 25, 2005 Kommersant - En route to IPO, Rosneft intends to convene the meetings of its subs before December 26, 2005. At those meetings, the holders are expected to give the go-ahead to merger into Rosneft. Should the progress in this undertaking suffer no deviation, it would make YUKOS the biggest minor of Rosneft. This outcome is most unlikely, the analysts are sure. For Rosneft, the assets' consolidation is the long-awaited move inspired by IPO, which is slated for the second half of the next year, and aimed at improving the company's capitalization before this initial public offering. As of late 2004, the minors' stake in Rosneft-Purneftegaz stood at 16.91 percent; Rosneft-Sakhalinmorneftegaz - 35.63 percent; Rosneft-Krasnodarneftegaz - 49.22 percent; Rosneft-Stavropolneftegaz - 28.05 percent; Rosneft-Tuapsenefteproduct - 62 percent; Rosneft-Komsomolsk NPZ - 22.69 percent; Rosneft - Tuapse NPZ - 18.49 percent; Yuganskneftegaz - 23.21 percent, according to Rosneft data. Of the 49-percent stake in Rosneft generally planned for disposal, from 7 percent to 8 percent will go to swap the stakes with the minors of its subsidiaries, Bogdanchikov forecasted in July, adding between 10 percent and 12 percent more could be sold to settle some portion of Rosneft debt (which surpasses $22 billion today). In view of the market value of Rosneft subsidiaries and that the whole consolidation of Rosneft will require from 7 percent to 8 percent of its stocks, Deloitte & Touche might have appraised the consolidated company at $38 billion. The interesting point is that today's holder of 23.21 percent in Yuganskneftegaz, YUKOS may become the biggest minor of Rosneft, the analysts say. The worth of those stocks reaches $1.7 billion, i.e. they could be swapped for around 4.5 percent in Rosneft. The market value of all other stakes of the minors doesn't exceed $1 billion, i.e. a bit more than 2.5 percent of consolidated Rosneft. Nevertheless, YUKOS will hardly become the largest minor. Yuganskneftegaz stocks of YUKOS former CEO Mikhail Khodorkovsky have been seized by the bailiffs and, therefore, don't vote at meetings related to possible stocks' disposal.

WASHINGTON, October 26 (RIA Novosti, Alexey Berezin) - An attorney in the United States representing minority shareholders in the Russian embattled oil major Yukos has claimed that they are owed $6 billion in damages. Thomas Johnson, from Washington law office Covington and Burling, told RIA Novosti that minority shareholders had bought 115,000 Yukos shares at market price and had sustained losses of about $6 billion because of a conspiracy to effectively renationalize Yukos without providing compensation for its owners. He said he was optimistic about winning a suit brought by 12 shareholders against the Russian Federation, state-owned energy companies and top executives, although he added the trial could be a long one. Johnson also said Russia's Industry and Energy Minister Viktor Khristenko had been served with a notification of a lawsuit while on a visit to the U.S. and had been told what the documents meant. He added that on Wednesday a court would receive a sworn statement from the person who gave Khristenko the documents, despite assertions made by a member of the minister's delegation, Stanislav Naumov, to the contrary. "It is their problem," Naumov said in response to the U.S. attorney. "The court will figure it out." Meanwhile, Nikolai Krylov, a lawyer for Gazprom, one of the companies named in the suit, said the $6 billion claim had no chance of succeeding. By the end of 2004, Russia's tax authorities said Yukos owned more than $25 billion in back taxes, which lead to the company's core production unit, Yuganskneftegaz, being put up for auction. It was later bought by state-owned oil major Rosneft, which is one of the companies named in the suit. Former Yukos head Mikhail Khodorkovsky is currently serving an eight-year prison sentence after being convicted of tax evasion and other offenses.

WASHINGTON, October 25 (RIA Novosti, Arkady Orlov) - Twelve shareholders in Russia's embattled Yukos oil major filed a lawsuit against the Russian government and oil and gas companies with a Washington court Monday. The U.S. television broadcaster NBC said the shareholders accused the Russian government of conspiracy to nationalize the oil company without paying compensation to the owners. Attorney Thomas Johnson of the Washington-based Covington and Burling law firm, who represents the claimants, said trying the case in an American court would set a precedent for bringing the Russian government and Russian oil and gas company executives to account for violating the shareholders' rights stipulated in the U.S.' securities legislation. NBC quoted Tuesday's issue of The Financial Times, which cast doubt on the outcome of the suit because complaints brought against foreign governments have little precedent in U.S. courts.

21.10.2005 11:40 [Neftegaz.ru] - Italian oil and gas company Eni SpA said on Thursday it has agreed to draw up a new, broader gas deal with Russian gas monopoly Gazprom, and ditched a previous pact that was criticized by antitrust regulators. In the previous deal struck in May, Eni had allowed Gazprom to sell some 10% of its exports to Italy directly to consumers. In exchange for authorizing Gazprom to use its pipeline capacity, Eni had obtained a 10-year extension of its gas supply contracts with Gazprom. Italian Antitrust regulators said the proposed deal failed to boost competition, while Eni's smaller rivals said Eni should have auctioned off its pipeline capacity instead of selling it to Gazprom in a private deal. Eni said Thursday the May pact is outdated. Under the terms of the new pact, Eni said it agreed with Gazprom to promote new deals related to oil and gas exploration in Russia, the sale of oil products outside Russia and of gas in Europe. Eni said top managers of the two companies would meet by the end of October to discuss details of new cooperation.

MOSCOW, October 21 (RIA Novosti) - Gazprom's acquisition of Sibneft oil company is crucial to raising the natural gas monopoly's profile as a major player on the global hydrocarbons market, the Gazprom chief executive said Friday after signing the $13 billion deal with Chelsea soccer club owner Roman Abramovich. Alexei Miller said the acquisition of Russia's largest privately-owned oil producer was paramount for Gazprom's ambitions to become a global company. He said Sibneft's development strategy was to be reconsidered. "If we set ourselves the goal of ensuring the steady supply of oil and refined products to our customers, the role of a long-term investment program will have to be enhanced and we will have to pay due attention to long-term and capital investment." He said Gazprom sought to boost oil production and would be spending more on oil exploration in order to expand its reserves. The Gazprom CEO also promised that Sibneft would become more transparent. "We plan to provide transparency in managerial decision making, as well as transparency of the company's financial structure and plans." Miller said Gazprom's expansion into the oil products market would make competition between oil producers tougher, but that consumers were the ones who stood to benefit.

MOSCOW, October 19 (RIA Novosti) - The newly appointed president of oil major Sibneft, which was recently taken over by Russian natural gas monopoly Gazprom, said Tuesday the new owner did not plan to sell the oil company's shares. "This is out of the question," Alexander Ryazanov told the Vedomosti business daily. "We bought this business and will not sell it, even in small portions." On Tuesday night, Gazprom CEO Alexei Miller introduced his deputy Ryazanov as the new Sibneft president. The Gazprom Board decided to buy a 75.7% stake in Sibneft, the country's fifth largest crude producer, October 17. The deal, the largest in Russia's corporate history, was agreed upon at the end of September. Last week, Industry and Energy Minister Viktor Khristenko said Gazprom might use Sibneft or its assets for exchange deals with partners. Khristenko said Gazprom was looking for strategic partners on various projects, which was why "liquid assets could come handy." Ryazanov, who will also retain his post as Gazprom's deputy board chairman, said he would develop the gas giant's oil business through Sibneft. "My objective is to consolidate Gazprom's oil business based on Sibneft," Ryazanov said. He also said that no talks had been set with Russian-British joint venture TNK-BP over Russia's Slavneft assets. "All that we bought with Sibneft, including 50% of Slavneft, will be consolidated," he said. Ryazanov said the forecasted decline in Sibneft oil production would be reversed. "We plan to invest in production, to obtain licenses on new fields." He said centralized exports through Gazexport, a Gazprom subsidiary, would be logical, as they offered a good export price. "We still have to consider the export scheme in detail," he added. Embattled Yukos, whose former CEO Mikhail Khodorkovsky is now serving an eight-year sentence for fraud and tax evasion, owns 20% of Sibneft. Ryazanov said it was now more important to preserve the company, to increase its efficiency, and to boost confidence of its personnel and minority shareholders than to buy out the Yukos share. Ryazanov also said the new Sibneft leadership would not completely change the management team. "Some staff decisions are possible, but in general, we plan to work with the established team." He said that no decision had been made to re-register Sibneft, which is currently based in the West Siberian city of Omsk, in St. Petersburg.

Moscow, October 18 (RIA Novosti) - Alexei Miller, the chief executive of Russia's natural gas monopoly Gazprom, announced Tuesday that his deputy, Alexander Ryazanov, would be the new president of oil major Sibneft, a source close to the oil company said. The Gazprom board of directors approved Monday the acquisition of a 75.7% stake in Sibneft. Gazprom and Millhouse Capital, an investment vehicle for Russian oil tycoon and Chelsea FC owner Roman Abramovich that controlled his Sibneft assets, signed an agreement in late September on the sale of 72.7% of Sibneft shares for $13.1 billion. The deal brought Gazprom's overall share in Russia's fifth largest oil company to almost 76%, including 3% it had already acquired from a subsidiary.

 RBC, 21.10.2005, Moscow 19:05:34 -Gazprom's CEO Alexey Miller met today with board chairman and CEO of Morgan Stanley John Mack and chairman of Morgan Stanley International David Walker to advise them of the outlook of Gazprom's share market liberalization. According to the press service of Russia's holding, the parties have paid special attention to the arising opportunities to attract strategic investors. Mack and Walker said Morgan Stanley was proposing to enhance its presence in Russia, and the parties discussed promising cooperation directions. Morgan Stanley has repeatedly acted as arranger of Gazprom's Eurobond issues. Specifically, in February 2003, Morgan Stanley was co-arranger and manager of the order book for Gazprom's bond issue worth USD1.75bn.

RBC, 21.10.2005, Moscow 13:47:48.Gazprom has reported the completion of its long-discussed acquisition of a 72.6 percent stake in Sibneft. As the Russian oil company said in a released statement, Gazprom Finance B.V. has been registered as a shareholder owning 3.445bn shares, or 72.66 percent of its stock capital.

Gazprom Transfers $13Bln for Sibneft

10-21-2005 The Moscow News - Gazprom was to complete its acquisition of Sibneft on Thursday by transferring $13.1 billion in cash to Millhouse Capital, said a source close to Gazprom. "The full payment for Sibneft is going through today, the entire 100 percent," the source said late Thursday. "The deal should be announced tomorrow." State-owned Gazprom agreed last month to buy 72.6 percent in Sibneft from the No. 5 oil firm's parent company, Millhouse Capital, which holds assets belonging to billionaire Roman Abramovich. Gazprom will now control 75.7 percent of Sibneft. The Millhouse purchase increases the state's control over crude oil output to about 30 percent, giving the government considerable leverage over an industry that as recently as a year ago was almost completely private. On Tuesday, Gazprom presented its deputy CEO, Alexander Ryazanov, as the new chief of Sibneft. He replaces Sibneft president Yevgeny Shvidler.

MOSCOW, October 12 (RIA Novosti)- Natural gas monopoly Gazprom CEO Alexei Miller and U.S. banking giant JP Morgan Chase CEO William Harrison have met to discuss Gazprom's development prospects, Gazprom said Wednesday in a press release. Miller told Harrison that Gazprom would be stepping up its oil-related activity, and discussed Gazprom's plans for liberalizing its share market. The sides also discussed JP Morgan Chase's cooperation proposals. In 2004, JP Morgan Chase issued a $200 million loan to Gazprom. It also took part in placing Gazprombank's bonds worth $1.05 billion in early 2004, Gazprom's press service said.

MOSCOW, October 12 (RIA Novosti) - The Russian natural gas monopoly Gazprom, the country's largest tanker company Sovkomflot, and the Sevmorneftegaz oil and gas company have signed a cooperation agreement on oil transportation by sea from an oil field on Russia's Arctic shelf, the Sovkomflot press service said Wednesday. "Sovkomflot will provide an integrated transport scheme, including shuttle tankers, a floating oil reservoir, and large-tonnage tankers to deliver oil to final consumers in Europe and the United States," the company press service said. Sovkomflot said that an integrated transport scheme managed by a single operator would create optimal conditions for safe and uninterrupted transportation from the oil field. Sevmorneftegaz, a 100% Gazprom subsidiary, is developing the Prirazlomnoye oil field on the Arctic shelf, on production sharing terms. Oil output is expected to reach 6.5 million metric tons per year. Oil shipments will begin in late 2007 and early 2008. Sovkomflot has placed an order with Russian state-owned shipyard Admiralteiskiye Verfi to build two ice-breaker oil tankers. The domestic shipbuilders will be making these tankers for the first time. Sevmorneftegaz also holds a license to develop the Shtockman gas field, expected to produce 22 billion cubic meters of gas annually after it is commissioned, which will be not later than 2010.

MOSCOW, October 11 (RIA Novosti) - Rosneft, Russia's second largest oil producer, is targeting a 10.7% increase in crude oil refining in 2005, year on year, up to 10.3 million metric tons, a company spokesman said Tuesday. Yury Matveyev told a news conference that the company's oil production this year was forecasted at 75.4 million tons and natural gas production at 12.9 billion cu m, compared with 21.6 million tons and 9.1 billion cu m, respectively, last year. Matveyev said Rosneft intended to be among the world's ten largest producers of hydrocarbons by 2015, extracting 100 million tons in 2010 and 136 million tons in 2020, with its gas production reaching 40 billion cu m and 80 billion cu m in the same period. Rosneft intends to invest about $1 billion to upgrade its Tuapse refinery to 12 million tons from the current four million and to increase annual oil transportation through the Russian port of Tuapse from 10 million to 17 million tons in the coming four years, he said. Rosneft also intends to invest $10 million in the exploration of the Western Kamchatka shelf in Russia's Far East, he said. Rosneft is Russia's only state-owned oil company, with 47 assets throughout the country.

MOSCOW, October 7 (RIA Novosti) - A Dutch subsidiary of Russian natural gas giant Gazprom will take out a $13 billion loan from six banks to finance the company's purchase of the Sibneft oil major, a respected business daily reported Friday. On September 28, Gazprom signed binding documents with Millhouse Capital, an investment vehicle for Russian tycoon Roman Abramovich, to buy 72.7% of the shares in Sibneft for $13.1 billion. A manager of one of Gazprom's creditors told Vedomosti that Gazprom Finance BV, which is based in the Netherlands, intended to agree the loan with six banks: ABN Amro, Dresdner Bank, Morgan Stanley, Goldman Sachs, Credit Suisse First Boston, and Citibank. Vedomosti said Gazprom Finance BV would then transfer the money to Sibneft shareholders so that the deal could be closed by the end of October. The secured sum will include three installments. The first short-term loan of $5 billion will be settled by the end of 2005 with the money that Gazprom is to receive from the government-owned energy company Rosneftegaz, the paper said. The remaining $8 billion will be split into a medium-term $3-4 billion for three to five years, and a short-term $4-5 billion that Gazprom will refinance by issuing Eurobonds. Experts said the loan was unique in terms of the sum and the structure. "It is the largest unsecured loan in Russia's corporate history," said Pavel Mamai from Renaissance Capital group. A source close to the deal told Vedomosti that Millhouse Capital planned to take the money out of Russia. "If the deal were concluded in Russia, it would be difficult to convert the sum into rubles and then transfer the money abroad," the source said. Sibneft declined to comment.

10-05-2005 Kommersant - Gazprom's subsidiary Gazprom Finance BV (GF), Netherlands, has applied to Russian Federal Antimonopoly Service (FAS) for a sanction for the purchase of the majority stake in Sibneft, FAS announced October 5, 2005, signaling Sibneft stocks executed in the name of offshore companies won’t come back to Russia but remain abroad and pass to the creditor banks in case of delay in the loan settlement. In late September, Gazprom and Millhouse Capital sealed the binding documents for the purchase of 72.663 percent in Sibneft for $13.1 billion, paving the way to the deal, which is expected to be clinched before the end of October but which pattern has not been unveiled so far. FAS made it clear yesterday Sibneft stocks are likely go to Gazprom Finance BV. The deal may also require the EC authorization, as Gazprom Finance BV is incorporated in the European Union. According to the Q2'05 report of Gazprom, it owns 100 percent in GF. Mikhail Sereda, who is the deputy chairman at Gazprom's management committee, is also the GF managing director. Another deputy chairman of the management committee of the gas monopoly – Andrey Kruglov – is the executive director at GF. Gazprom declined to comment Tuesday. A source with the gas monopoly said off-the-record GF was picked out because the syndicated loan to buy out Sibneft had been raised with the foreign banks exclusively. The thing is that the laws of the Netherlands are the most suitable for the creditor banks (ABM Amro, Dresdner Kleinwort Wasserstein, Citigroup, Morgan Stanley, Golgman Sashs, Credit Suisse) as they guarantee the whole title. In other words, the banks may loan money on security of acquired stocks of Sibneft and would actually get the stocks in their onwership, should the funds be not paid off in time. And all these moves could be made with the deal never falling under the Russian jurisdiction. Gazprom briefer Sergey Kupriyanov announced not long ago Sibneft is not the last asset to be bought out by the gas holding. The next target of Gazprom, the analysts say, is some portion of YUKOS assets to be followed by Bashkir refineries currently owned by Ural Rakhimov’s Bashkir Capital and AFK Sistema. Moreover, as Gazprom’s interest in Sakhalin projects of Rosneft is an open secret, some analysts say it may swap Sibneft for those assets.

MOSCOW, October 4 (RIA Novosti) - The Russian gas giant Gazprom was granted 30-year licenses to develop natural gas fields in Venezuela, the company's news service said Wednesday. "The Venezuelan government handed Gazprom licenses to develop Urumaco 1 and Urumaco 2 investment blocks," the service said. It said the company would conduct seismic survey and drilling works during the first four years. In 1999, the Venezuelan government passed a law On Natural Gas to promote foreign investments in the gas industry. Gazprom set up two joint stock companies, UrdanetaGazprom-1, C.A. and UrdanetaGazprom-2, C.A., in compliance with the terms of the Urumaco 1 and Urumaco 2 tender.

HOT  MOSCOW, October 5 (RIA Novosti) - Russian oil company Tatneft won a bid Wednesday to explore and develop an oil deposit in Libya, a company news release said. Under the contract, which must be signed within 30 days, Tatneft will have access to a 2,000-square-kilometer deposit in the country's central region. International oil companies, including ExxonMobil, ChevronTexaco, Total, BP, Shell, CNPC, and ONGC, and Russian companies Gazprom, LUKoil, and NGK Itera, bid on the tender, which was announced by Libya's state-owned National Oil Corporation (NOC). Tatneft, Russia's sixth largest oil producer and No. 32 in the world, extracts 512,000 barrels per day from 77 deposits, including the Romashkinskoye oilfield, one of the world's largest. Tatneft ranks No. 21 for proved reserves. Its annual oil production totals 25 million metric tons and natural gas, more than 700 million cubic meters.

RBC, 04.10.2005, Moscow 14:53:39.Rosneft is interested in all promising hydrocarbon projects in the Far East and Sakhalin regions, Lev Brodsky, general director of Sakhalin Projects that manages Rosneft's shares in far eastern shelf projects, has told journalists. Among such projects he cited Sakhalin-3, Sakhalin-4 and Sakhalin-5. As for Sakkhalin-3, the company proposes to complete prospecting and seismic studies together with Sinopec (China) even in 2006. Rosneft also means to take part in the bids for two other locations. Seismic and prospecting operations have been completed at the Sakhalin-4 and Sakhalin-5 locations, and the forecasted reserves were confirmed. Now, the company is considering participation in bids for licenses to produce oil there. When asked about Rosneft's prospective cooperation with ONGC for the purpose of the Sakhalin projects, Brodky did not rule the possibility out altogether, yet he said no negotiations were being held between the companies. The manager also mentioned the company's new western Kamchatka project. The company has entered into an agreement with Korea National Oil Company for preliminary examination of hydrocarbon reserves there.

MOSCOW. (By Doctor of Economics Sergei Kolchin for RIA Novosti) - At the end of September Gazprom and Millhouse Capital signed a contract for the Russian gas monopoly to acquire a 72.663% stake in Sibneft for 13.091 billion dollars. Earlier, Gazprom had bought 3.016% of Sibneft shares from Gazprombank. As a result, Gazprom has control of 75.679% of Sibneft. This makes Gazprom a diversified company with assets in gas, oil and energy industries. Its oil output (previously 3 per cent of the total in Russia) will now exceed 10%, and the company is becoming a key player on the Russian oil market. The Federal Anti-Monopoly Service, however, said it saw no reason to invalidate the deal. "There is no company on the oil market whose share exceeds 20%. Even if Gazprom's deal goes through, the company will not dominate the market," explained FAS deputy head Anatoly Golomolzin. What can be said about Sibneft, the company acquired by Gazprom? In the past, it was among the industry leaders, although its performance in 2005 has been moderate compared with its peers. During the first six months of the year its output did not increase; moreover, Sibneft investors were disappointed, as the press reported. It scaled down 2004 profits by 10.2% (falling short of planned dividends). Recently it posted unsatisfactory production statistics. Sibneft has always been known for its pace of growth. Now it may be the only Russian company to produce less oil this year than last. Yet its proportion of Russia's oil output in 2004 was a substantial 3.4 million metric tons, and, factoring in its stake in Slavneft, increases this figure by 10 million tons. On the other hand, Sibneft reports show increased earnings for 2004: consolidated financials according to the US GAAP standards published in July 2005, show that in 2004 the company's earnings rose by 32%, compared to 2003, and reached $8.89 billion, and net profits totaled $2.05 billion. In addition to Sibneft, Gazprom may also acquire Millhouse's other Russian oil assets not directly owned by Sibneft but posted in consolidated reports according to the US GAAP standards. They include 49.5% of Slavneft and its subsidiaries (an equal share is owned by TNK-BP), 36.84% of the voting shares of the Moscow oil refinery and a 49% stake in Sibneft-Yugra. The alignment of forces in the Russian oil sector is bound to change. But the deal is more interesting from the perspective of current economic policy. Now the state will control nearly one-third of Russia's oil output (Rosneft, state-owned Yuganskneftegaz, Sibneft with half of Slavneft, and Gazprom own production). This is a symptom of reverting to state capitalism. But at the same time Alexei Kudrin and German Gref, leading economic ministers, have protested against the state's further interference in the economy. Whether it is a signal to reassure outside consumers that Russia is as committed to market reforms now as it was in the past, or evidence of differences existing in the upper echelons of power concerning their strategy, is not clear. In fact, western partners show little concern about who will supply them oil and gas - public or private companies. It is more important for them that Russia honors its delivery obligations. Therefore, if this is a signal to the West, it has more political implications designed to influence public opinion. Officials have also stressed that the deal was negotiated according to "transparent market practices", a reference intended to reassure the West. Gazprom's purchase of Sibneft sent shock waves through the Russian stock market. As soon as the news was confirmed, the Russian Trading System (RST) shot up beyond the 1,000 points mark. The most drastic changes are expected on the Russian oil and gas market. Very soon its structure will be very similar to the industrialized countries, with two to three transnationals at its core, which will become part of the world energy market and bring substantial dividends to their country's economy. Gazprom's takeover of one of Russia's biggest oil companies offers some advantages, experts believe, especially to encourage the integration of our oil and gas companies into the world economy. However, Russia's previous merger and takeover experience in oil and gas sector suggests that it is too early to pass a final judgment on the deal.

BRUSSELS, October 3 (RIA Novosti) - Russian natural gas monopoly Gazprom intends to build a depot in Belgium for natural gas delivered via North European gas pipeline (NEG), Russian President Vladimir Putin said Monday. "Gazprom is negotiating an agreement with the Belgian partners on the construction of a major natural gas depot," Putin said. France, the Netherlands and Britain have expressed interest in participating in the NEG project, he said. The 1,200km-long NEG pipeline will not employ third-party countries for transit, lowering transport costs and making it more reliable for export. The pipeline will pass through Russia's Vyborg region, go under the Baltic Sea and emerge in Germany. Putin also said Russia intends to increase natural gas deliveries to European countries by 60 billion cu m in the near future. "The contracts have been signed already," he said. Putin said Russia is ready to remain a reliable partner for Europe in increasing its energy security. "We are increasing the production and sales volume [of energy resources] and will continue doing so," he said.