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. Last Updated: 07/27/2016

Oil Disaster Firm Attracts Foreign Investor

Komineft, still reeling from the bad publicity it received in the wake of the massive leakage of oil from one of its pipelines in the arctic tundra near Usinsk, has sold 5.3 percent of its stock to the German company VIG Interoil Handels GmbH at an investment tender, officials said Monday.

Valery Ilyin, spokesman for Komineft, said the German company won the investment tender Oct. 20 in a contest with the Russian firm International Economic Cooperation after offering investment worth 62 billion rubles ($22.2 million)

Valery Tikhomirov, head of the auctions and tenders department with the Komi republic's state property fund, which administered the tender, said the German firm had paid 1.17 billion rubles, six times the shares' face value, for a 5.3 percent stake in Komineft.

This was despite the fact that shares at investment tenders held as part of the privatization program are supposed to be sold at their face value, in this case 100 rubles.

Tikhomirov conceded that the oil company and the state property fund had applied pressure to the German company to pay over the odds for the shares in order to win the tender.

"I admit that we are twisting arms, but that is what we live on," he said in a telephone interview from Syktyvkar, capital of the Komi republic.Komineft went private this April, but the state keeps a controlling share of 51 percen, Ilyin said.

Ilyin said that the new investment capital would be used to update the company's obsolete equipment. He added that several hundred of Komineft's 3,500 wells were standing idle because of a lack of funds with which to repair them.

VIG Interoil will also pay part of Komineft's debt to the state budget, which exceeds 240 billion rubles, Ilyin said.