MOSCOW, July 30 (RIA Novosti)
Acron postpones GDR placement on LSE / PetroVietnam and Gazprom may build fertilizer plant / South Stream pipeline costs doubling / BP differs with TNK-BP in net profit estimates for joint venture / Russia's Mail.ru postpones its London IPO until 2009
Vedomosti
Acron postpones GDR placement on LSE
On July 29, 2008, Russia's Acron, one of the world's largest mineral fertilizer producers, announced its decision to postpone the placement of global depositary receipts (GDRs) on the London Stock Exchange (LSE) in view of the unfavorable market situation.
Acron planned to sell 10% of its shares to investors. The company hoped to close the deal at a price of $120-150 per share ($5.7-7.2 billion for the whole company). The company's main beneficiary, Vyacheslav Kantor, wanted to sell 6% of the shares and the company's subsidiary, Dorogobuzh, 4%. By July 23, when the price bracket was announced, Acron's shares in the Russian Trading System (RTS) cost $120.6 per share.
However, after the crash on global stock markets and Russian Prime Minister Vladimir Putin's tough statement on Mechel Group, Acron lost 12% on the RTS in a single day. On July 25, the company's stock traded for $98.5 per share (with the market capitalization of $4.7 billion). The company failed to recoup itself on July 28: its capitalization increased by just 2%. When Acron announced the cancellation of its secondary public offering (SPO) in London, it fell by 10.45%, to $90 per share, and the session closed at that price, Vedomosti says.
"The company still hopes to be listed in London in the future," says Acron's statement cited by Vedomosti. It does not mention the possible timeframe.
Alexander Popov, Acron's vice president, says that investor interest in the company displayed during its roadshow was very high. Vedomosti quotes him as saying: "We have confidence in our business and development plans, and we will strive to increase Acron's market capitalization. However, under the current complex market situation, it would not be reasonable for the company to go on with the [GDR] placement,"
This is not the first failure of Russian chemical companies. In 2006, Uralkali had an unlucky debut on the LSE. The company's main owner, Dmitry Rybolovlev, offered 20.84% of Uralkali's shares to investors at a price exceeding the market price by about 15%. The company failed to place the whole stake within the declared price range and Rybolovlev cancelled the deal at the last minute. A year later, Uralkali placed 12.75% of its shares at the top price of the declared price range. Rybolovlev raised over $1 billion through the deal.
Kommersant
PetroVietnam and Gazprom may build fertilizer plant
Yesterday, PetroVietnam's international and legal relations chief, Vu Khanh Truong, said his company could cooperate with Gazprom in building a nitrogen fertilizer plant in Russia within the framework of the joint venture Gazpromviet.
Currently, only one nitrogen fertilizer plant, with production capacity of 740,000 metric tons a year, is operational in Vietnam. To satisfy growing demand, another 800,000 tons a year are needed.
Troika Dialog analysts say $800 million would be needed to build a plant with this capacity.
PetroVietnam representatives say the idea of building a fertilizer plant in Russia resulted from the absence of free nitrogen, the raw stock for fertilizers, in Vietnam, as the country consumes all the annual output of 7 billion cubic meters. Exploration of the Vietnamese continental shelf is underway for Vietgazprom, a joint venture by PetroVietnam and Gazprom. "By the fall, we should have completed the feasibility studies for the development of three blocks in the country's south," a source at Gazprom said.
In May, 2008 Gazprom and PetroVietnam signed an agreement to create Gazpromviet, a joint venture for oil and gas projects in Russia, the CIS, North Africa and Latin America. The 100% Gazprom-owned Zarubezhneftegaz confirmed that in June that a PetroVietnam delegation had held talks in Moscow on the creation of the joint venture.
"We are satisfied with our PetroVietnam partnership and look forward to an effective cooperation. The new company is being established primarily for oil and gas production, but other activities are also possible", said Ivan Gogolev, head of Zarubezhneftegaz public relations department.
Gazprom refused to comment.
Mikhail Stiskin of Troika Dialog pointed out that today's discussion featured many new projects for nitrogen fertilizer manufacturing. "These projects depend on whether Gazprom grants its Vietnamese partners access to its pipelines," the analyst added. "Not confirming the negotiations being held does not mean Gazprom is not interested in cooperation with a certain Vietnamese company."
The project could be carried out as a Russian-Vietnamese interstate partnership, Maxim Shein of BrokerCreditService added.
In May, the state-owned Zarubezhneft won a tender to develop four oil blocks estimated at 80 million metric tons in the Nenets Autonomous Area. The company established the Rusvietpetro joint venture to cooperate with PetroVietnam, which was the predetermined winner of the tender despite bids from Rosneft, TNK-BP and Surgutneftegaz. This agreement was a kind of exchange for the extension of another joint venture between the two companies, Vietsovpetro, which produces oil on the Vietnamese shelf, after 2010.
RBC Daily
South Stream pipeline costs doubling
Russian Energy Minister Sergei Shmatko announced that the projected cost of the South Stream project has risen to $20 billion, the ministry's press service said.
Earlier this year, the cost was estimated at $10 million. Analysts believe the doubling of the figure could hinder the launch of the pipeline's construction.
The South Stream pipeline will be built jointly by Italian Eni and Russian Gazprom. It will pump Russian gas under the Black Sea to Bulgaria and then to southern and central Europe. The pipeline will ship 30 billion cubic meters of gas a year and begin operating in 2013. Bulgaria, Serbia, Hungary and Greece agreed to take part in the project.
At a meeting with Italian Economic Development Minister Claudio Sacjola, Sergei Shmatko said South Stream "is a very interesting project worth about $20 billion."
Earlier this year, initial estimates made by Eni CEO Paolo Scaroni were more modest - about $10 billion.
Gazprom and Eni declined to comment on the rise in the investments.
Shmatko discussed South Stream yesterday with Greek Development Minister Christos Folias. Smatko noted that decision-making delays affect the cost and reputation of the project. To advance decision-making, the Russian minister and the Greek party agreed to establish a monitoring group that will control the project's realization.
This $20 billion does not reflect the real cost of the project, Metropol analyst Alexander Nazarov said. He believes that "there was no final calculation, and this amount was announced without a proper feasibility study." The rise in the initial estimate can be caused by the simple revaluation of the project, or cost-push inflation, Nazarov said. From the beginning of 2008, pipe prices rose by 50%. The second cause could be the new technical details of the pipeline's route, for example, terrain difficulties.
It is unlikely that the doubling of pipeline costs will deter investors, but its realization can be delayed. Especially taking into account that South Stream, unlike Nord Stream, will be built not to transport gas from a Gazprom gas field but Central Asian gas. The member countries will say only that they will more attentively study the project's feasibility study, Nazarov said.
Nazarov thinks that the rise in investment will cost Gazprom an additional 30 billion rubles per year. This is no more than 3-4% of the supposed capex of the company in 2010-2012. "It is not critical for Gazprom," Nazarov said.
Sergei Pravosudov, director of the National Energy Institute, stressed that as gas prices are also rising, the project will be profitable in any case.
The projected costs will be revised not once but only upward, Mikhail Korchemkin, director of the consulting company East European Gas Analysis, said. He added that shipping gas along the Nabucco pipeline will cost 30-40% less than along South Stream and it means the route through Turkey will be more profitable for Azerbaijan, with whom Gazprom is holding talks on gas supplies.
Vedomosti
BP differs with TNK-BP in net profit estimates for joint venture
On July 29, BP reported its performance in the second quarter and the first half of the year.
In January-June 2008, revenue rose by 48%, to $200.12 billion, net profit by 40.9% to $17.17 billion, and BP's share in TNK-BP's net profit (BP holds a 50% stake in the Russian-British joint venture) surged by 150%, to $2.09 billion.
According to BP's estimates, TNK-BP's total net profit was $4.19 billion. This figure differs from TNK-BP's preliminary data. Tim Summers, TNK-BP's chief operating officer, said last week that the company's net profit rose by 28%, to $4.7 billion. The difference in estimates amounts to $510 million.
Vladimir Buyanov, BP's spokesman in Russia, says that BP and TNK-BP's reports always differ.
Fergus MacLeod of BP's investor relations department, explained that TNK-BP prepares its reports according to US GAAP standards, while BP - according to IFRS standards.
Artyom Konchin, an analyst with the Aton brokerage, says that there are other reasons for the discrepancies. There is TNK-BP International owned by BP and the AAR consortium on a parity basis. There is also TNK-BP Holding, which is traded on the RTS (its capitalization was $29.7 billion on July 29), and does not include TNK-BP International's assets, such as Rusia Petroleum (which holds licenses for the development of the Kovykta and Verkhnechonskoye deposits in Eastern Siberia), a stake in Slavneft and some Ukrainian assets.
It is important to understand which of the companies Summers meant when talking about profits. Konchin recalled that by the 2007 yearend results, the net profit of TNK-BP International amounted to $5.2 billion and that of TNK-BP Holding, $5.7 billion.
Due to a surge in oil and gas prices, BP and TNK-BP received record-high results [this year], says Denis Borisov of the Solid group. According to his forecast, TNK-BP's net profit will reach $8.2 billion this year.
Kommersant
Russia's Mail.ru postpones its London IPO until 2009
Mail.ru shareholders have not abandoned plans to offer their company's stock on the London Stock Exchange (LSE), CEO Dmitry Grishin told Kommersant on Tuesday.
"We have decided to postpone the IPO for a year. The reason is simple: all shareholders who wanted to sell their stakes have done so, and it makes no sense to step up the process."
Mail.ru has never in the past confirmed its trading plans officially. A source close to the company said that Port.ru Inc. will carry out the IPO. It owes netBridge Ltd., a 100% owner of Mail.ru.
Grishin said that in July the list of Mail.ru beneficiaries was overhauled, but now can be considered fixed until the public offering.
A source close to the company said that Tiger Global Management, an American investment foundation, last week sold 14.55% of its 27.95% stake in Mail.ru to Digital Sky Technologies (DST), managed by Yury Milner, a former director of Concern Neftyanoi, and Grigory Finger, executive director of NCH Advisers. The source said that Tiger had initiated Mail.ru's IPO in 2008 to do profit-taking.
Currently, he said, 50.55% of Mail.ru is controlled by DST, 13.4% by Tiger, and 32.6% by the South African media company Naspers Ltd., with the rest belonging to minority shareholders, including Dmitry Grishin.
Sources in some investment banks, including Deutsche Bank and Renaissance Capital, say the list of DST owners is now also changed and includes businessman Alisher Usmanov. The Mail.ru top manager said Usmanov has obtained 30% in DST.
As the Mail.ru IPO was scheduled for the third quarter of 2008, no new share issue was planned. Citibank, Goldman Sachs and Credit Suisse wanted to underwrite it.
"Mail.ru finally chose Goldman Sachs," said an official of one of these banks.
Goldman Sachs yesterday declined to comment.
"As far as we know, the owners of the Internet resource planned to sell between 25% and 40% in the company, i.e. not only Tiger wanted to take profits. But the situation on the financial markets would not have allowed them to secure adequate capitalization. There was even a strong urge to cancel the IPO," said Ivan Shuvalov, a senior Alfa Bank analyst.
Under the current setup, he believes, Mail.ru can look to a capitalization of $1.5 billion at the most, while shareholders want $2 billion.
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