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    Opinion: Gazprom to out-maneuver Rosneft

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    MOSCOW, August 18 (RIA Novosti political commentator Peter Lavelle). There is strong evidence that Gazprom plans to acquire 92% of Sibneft, out-maneuvering its arch-competitor, the state-owned oil company Rosneft.

    In its bid, Gazprom may have found an unlikely ally - Yukos.

    In the past few weeks, it has been widely assumed that Gazprom is interested in purchasing a majority stake in Sibneft, owned by Roman Abramovich's investment vehicle Millhouse. Initially, it was believed that Gazprom was in negotiations to purchase 72% of Sibneft, but now the figure appears to have increased by 20%, to 92%. Given reports that Gazprom is reportedly seeking to raise $10 billion through ABN Amro and Dresdner Klein Wasserstein, financing the purchase will not be a problem for the company.

    What stands in Gazprom's way is Sibneft's inability to sell 20% of its shares to reach the goal of 92%. Sibneft's core shareholders sold the 20% stake to Yukos for $3 billion in the summer of 2003 at the first stage of the merger between the two companies. The stake was later frozen by a court order amidst criminal investigations into Yukos' core shareholders, and never returned to Sibneft.

    Gazprom is not the only energy player interested in Sibneft's frozen stake. Rosneft CEO Sergei Bogdanchikov has taken legal action to seek control of the stake as compensation for damages inflicted by Yukos on its former subsidiary Yugansk, acquired by Rosneft in December 2004. To date, Bogdanchikov has lost two court appeals to capture the 20% stake.

    Interestingly, the company that may see Gazprom's bid for Sibneft come to fruition is Yukos. According to a source close to this story, Yukos is discussing the return of 20% in Sibneft to Millhouse on the condition that it be compensated for the stake at market price (over $3.3 billion at Wednesday's close), rather than the $3 billion originally paid, plus an additional $460 million in dividends accrued since the failed merger.

    From a business perspective, it is unclear why Gazprom is interested in an additional 20% stake in Sibneft. After purchasing Millhouse's 72% in Sibneft, Gazprom would only need an additional 3% plus one share to secure a supermajority and deny Rosneft any opportunity to consolidate a blocking share in Sibneft. Gazprom's willingness to pay what would be a super-premium for Sibneft, with Yukos' help, may be a strategy to thwart Rosneft's ability to question the legality of the purchase.

    Gazprom's determination to acquire Sibneft also sheds light on the relative power of the Kremlin's two energy lobbies. Dmitry Medvedev, Putin's chief of staff and a Gazprom board member, is seen to be leading the Kremlin liberals. Facing off this group is Rosneft board member Igor Sechin. Medvedev's deputy, he is seen to represent Kremlin hawks hailing from the security forces. If Gazprom succeeds in its Sibneft bid, Bogdanchikov and Sechin will have no other choice but to eye Yukos' remaining production units - Samaraneftegaz and Tomskneft - to reach its goal of becoming Russia's largest oil producer by 2008.

    Yukos' role in Gazprom's plan is intriguing. Is Yukos demanding some kind of quid pro quo (other than demanding to be paid) for selling back Sibneft's shares? Assuming Gazprom acquires Sibneft with Yukos' help, will Yukos also demand some "political cover" once Rosneft starts eyeing Samaraneftegaz and Tomskneft? It is also not impossible that Yukos sees the writing on the wall - it will eventually have to surrender its last major assets and intents to negotiate their handover with the friendly Gazprom and not the predator Rosneft?

    Gazprom twice lost out on its bid to acquire Yugansk during the forced break-up of Yukos. Rosneft has failed twice to acquire Sibneft's frozen shares. Who would have thought, after all it has been through, that Yukos still has the ability to tip the scales in favor of one Kremlin energy lobby at the expense of the other?

    The opinions expressed in this article are those of the author and may not necessarily represent the opinions of the editorial board.

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