LUKOIL AUCTION SET FOR SEPTEMBER 29

MOSCOW, August 26 (RIA Novosti) - The government's stake in the petroleum company Lukoil will be put up for auction on September 29 and the starting price will be $1.928 billion, announced Kirill Tomashchuk, Acting Chairman of the Russian Federal Property Fund. According to him, bids will be accepted August 30 through September 27. By that latter date, bidders will have to put a deposit of 450 million rubles [the U.S. dollar now buys 29.22 rubles] and to notify the Anti-Trust Service about their intention to purchase the stake.

If the auction goes ahead as planned, this will be the biggest deal in the history of [post-Soviet] privatization. It will outstrip Slavneft and Svyazinvest in the amount of selloff proceeds, Mr. Tomashchuk said.

According to him, ConocoPhillips and Dabir International had announced their intention to go for the Lukoil stake, but that no Russian company had so far expressed interest in bidding. He said he had met with ConocoPhillips officials and with Dabir International's David Guggenheim, but that their recommendations had not been taken into account when fixing the starting price of the stake. The LUKOIL management's opinion was not considered, either.

The Russian Federal Property Fund expects the stake to be auctioned off at a price equal to or higher than the market price of LUKOIL shares on the day of sale. The starting price for the stake is based on the per-share price of $29.83. On the Russian stock exchange, LUKOIL shares are currently trading at $28.3-$28.5.

"If the starting price turns out to be lower than the market price, the auction may be cancelled," Mr. Tomashchuk said. In his opinion, there will be no bear market, as market players have already responded positively to the LUKOIL stake's starting price and few can be really interested in bringing that price down. "The announced price is close to the market's," he added.

The price may go down, however, owing to macroeconomic or other "fundamental" factors, capable of triggering a fall on the stock market, said Kirill Tomashchuk. These factors include, among others, the Yukos affair.

The Federal Property Fund official also revealed that a government resolution was forthcoming, on the privatization of the Magnitogorsk metallurgic plant before the end of this year. The plant figured on the 2003 privatization plan, but it was listed as a strategic enterprise back then. Now it has been taken off the strategic list and put instead on the supplementary list to the 2004 privatization program," Mr. Tomashchuk reported. He said he was hopeful that the government's 25% stake in the Novorossisk sea port will also be sold off this year.