Dispute Delays Return of Chernogorneft to Sidanko

The self-imposed deadline for Russian oil giants Tyumen Oil Co., or TNK, and Sidanko to determine the fate of the coveted Chernogorneft production unit came and went Sunday without resolution.

TNK acting director German Khan and Alexander Knaster, the CEO of TNK shareholder Alfa Bank, said at a news conference Monday that the deadline had been missed because of continued disagreements with Interros Holdings, Sidanko's largest shareholder.

TNK acquired Chernogorneft, which at 6 million tons a year accounted for 55 percent of Sidanko's production, for $176 million last November. But in December, the shareholders of both companies agreed that TNK would return Chernogorneft to Sidanko in return for a 25 percent-plus-one-share-stake in Sidanko, which would then enable TNK to veto Sidanko's board decisions.

Interros is now insisting on completing a major new share issuance as part of the swap.

Interros began to insist on the new share issuance after it was discovered in April that Interros had pledged nearly all of Sidanko's shares in the course of debt restructuring discussions last year.

Khan condemned the new share issuance as "illogical and unnecessary." It would double the risks for TNK and could potentially dilute the shares of minority shareholders and creditors, he said.

"No logical explanation has been offered for the new issuance," Khan said, demanding that Interros provide TNK with sufficient information or documents about the issuance that will allow TNK to assess the transaction risks.

Khan also proposed that the swap be completed with the use of existing Sidanko shares.

Sidanko was not immediately available for comment.

The share issuance is also opposed by British Petroleum, which owns a 10 percent stake in Sidanko and plans to participate in a joint venture with TNK to develop the Samotlor oil field.