MOSCOW, August 5 (RIA Novosti)
Gazeta
Total drops Novatek bid - comment
Russia's largest independent natural gas producer, Novatek, has little to regret about French oil giant Total's decision on Thursday to drop its bid for a controlling stake after the Federal Anti-Monopoly Service failed to respond to its application, a popular daily reports Friday.
Gazeta writes Total's loss in Russia would obviously undermine its plans to increase oil and gas production by 4% in 2004-2010, the most ambitious development program in the oil industry. Without a stake in Novatek, Total output will grow by no more than 3% until 2010.
Late last September, Total applied to the competition authorities for permission to buy 25% plus one share in Novatek, hoping to have the deal completed by the end of 2004.
Experts were been pessimistic about the bid from the day it was announced, because Novatek shareholders valued their assets at more than Total was ready to pay: the gas producer raised $966 million in a recent London flotation of 19% of its equity, but Total offered only $850 million for a controlling share stake.
The regulator first promised to consider the case by April this year, but then postponed the decision until May, the paper writes. Even a request made by French President Jacques Chirac to his Russian counterpart Vladimir Putin to accelerate the process was unsuccessful.
The Anti-Monopoly Service had no formal reasons to block the Total bid that, as Russia's natural gas monopoly Gazprom produces 25 times more gas than Novatek. The only existing energy project in this country Total is currently involved in is a share in the Kharyaginskoye oil field in the northwest of European Russia, which produces a million metric tons a year.
Another theory for the failed Total bid is that through the numerous postponements Russia might have been sending a message: "open your markets and we will open ours." But this seems to have fallen on deaf ears.
Now the deal is history.
Vedomosti
Gazprom buys prime Arctic shelf assets from Rosneft
Russia's natural gas monopoly, Gazprom, pulled off something of a coup with the acquisition of state-owned oil major Rosneft's Arctic shelf energy projects, a leading business daily reports Friday.
Vedomosti writes that Gazprom now owned assets that are worth far more than it paid for them.
Rosneft subsidiary Purneftegaz yesterday posted a net profit of about $1 billion for the second quarter - 90 times up on the first quarter - after selling its 50% stake in Sevmorneftegaz, a Gazprom/Rosneft joint venture with licenses to the Arctic Shtokman natural gas field and the Prirazlomnoye oil field, for $1.3 billion.
Under a Gazprom-Rosneft deal, the natural gas giant's banking arm, Gazprombank, bought the 50% stake in Sevmorneftegaz, 49.95% in major Arctic projects in the Barents and Pechora seas, and 26% in Rosshelf, another holder of Shtokmanov and Prirazlomnoye licenses. When the project was announced last year, a Gazprom source said Gazprombank had bought the whole lot for $1.7 billion, which Rosneft spent on Yuganskneftegaz, the core production asset of embattled oil giant Yukos.
Under the deal, the paper writes, Gazprombank could call for a share buyback until June 20, 2005 but a company official said Gazprom chose not to do so. "This is a strategic asset, we have great hopes for the shelf [deposits]," he said.
Lev Snykov, an analyst with FIM Securities, said Gazprom was correct to move ahead with the deal. With the Shtokman field alone valued at $5 billion, the assets are worth many times the $1.7-billion price tag, he said.
Prirazlomnoye (Pechora Sea) reserves are estimated at 83.2 million metric tons of oil; Shtokman (Barents Sea), a target for liquefied natural gas exports to the United States, is estimated to have about 3 trillion cubic meters of natural gas and about 30 million metric tons of gas condensate.
Prior to the Rosshelf deal, the company's major shareholders were Gazprom (53%), Rosneft (26%), and drilling platforms producer Sevmashpredpriyatie (13%).
Kommersant
Russian uniformed services okay Svyazinvest deal
Hurdles hampering the privatization of major international telecommunications company Svyazinvest have been cleared, the daily newspaper Kommersant reports Friday.
A draft of an executive order scratching the holding company off the list of the country's strategic assets has been approved by the Interior Ministry and shall be resubmitted to the government for consideration as early as next week, Economic Development and Trade Minister German Gref said Thursday.
Once issued, the decree will remove the main obstacle for Svyazinvest's privatization - the cap on selling more than 25% of the company's stock. "This is a substantial step towards privatizing the company, though it does not mean that it will be privatized this year," a ministry spokesperson said.
The agreement must win the approval of Svyazinvest's minority stockholders. However, experts say there are not many conditions the uniformed services could attach to the privatization deal.
"The guarantee of uninterrupted access to communications services after privatization should be granted to the so-called "special consumers", namely the Defense Ministry, the Federal Security Service, the Interior Ministry, the Emergencies Ministry, the Federal Guard Service and the Justice Ministry, even if they drag their feet on paying for the services rendered," said Alexei Yakovitsky of United Financial Group. If Svyazinvest is privatized, its new owner might terminate the uniformed services' access for payment arrears, which they hope to avoid, he said.
According to Svyazinvest, the uniformed services owed more than 600 million rubles, or $21 million, as of July 1, 2005. Alexander Kazbegi, an analyst with Renaissance Capital, presumes that there will be no above-the-board competition in privatizing Svyazinvest, "i.e. there will be more lucky buyers from the outset."
Experts say the agreement with the Interior Ministry will enable the government to announce Svyazinvest privatization terms as early as this fall.
Biznes
Chinese pipelines may appear in Russia, not U.S.
The United States is preparing to introduce an import quota for Chinese welded pipes, which may mean that they could come to the Russian market, a business newspaper reported Friday.
Biznes wrote that Russian pipeline producers feared a repeat of 2004, when Ukrainian producers dumped their pipelines on the market.
Seven U.S. pipe producers have initiated an anti-dumping investigation by the U.S. International Trade Commission. They consider that the import of the given pipes from China should be limited to 90,000 metric tons a year. But 182,000 tons of Chinese pipes have already been supplied. If the Americans establish quotas, about 250,000 tons of Chinese pipes may end up on the Russian market. The U.S. hearings on the issue will be held in mid-September.
The Chinese pipes would equal a 5% share of the Russian pipe market, said Alexander Deineko, who heads the Pipe Industry Development Fund. If they were to emerge in Russia, he said medium-sized and small plants producing pipes for regional needs would be the first to suffer, but major producers would also be hit hard.
"We knew that a net exporter was building up its presence nearby," Deineko said. "But we did not think it would become a real threat as early as 2005."
In the opinion of Dmitry Baranov, head of analysis with the PRADO Bankir i Konsultant commercial group, the threat of China losing the U.S. market is real. However, he said China would try to dispatch the "released" pipes to Southeast Asia and the Middle East, as there are no major pipe exporters from the U.S. and Europe. He added it was unlikely that these pipes would be competitive in Russia due to their inferior quality.
Meanwhile, Andrei Litvin, an analyst with MDM bank, said he was certain that Russia would have time to introduce protective measures, as was the case with the Ukrainian pipes in 2004.
