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. Last Updated: 07/27/2016

Tyumen Oil Auction Suspended by Court

A cash auction for 49 percent of Tyumen Oil Co. was suspended by court order Thursday, the day bidding was to close, with some experts attributing the delay to an improper bid by one of the aspirants.


The Federal Property Fund, organizer of the auction, confirmed that Tyumen was suspended at the behest of the Zamoskvorechye Municipal Court, but did who the protesting party was or why a bid would have been refused.


The court was acting on a decision by the Moscow Arbitration Court handed down Nov.14, said Vladmir Efimchik, spokesman for the property fund. He said the auction will eventually go forward, but anyone wishing a refund of their bids can apply for one.


Tyumen spokesman Alexander Segal said the latest development is only hindering the company's investment plans.


"This is a problem for us," he said. "We are like spectators at a football match, as we have no part to play in our own privatization."


The auction was postponed once before in September, though at the time officials gave no reason for the delay.


Analysts said the reasons for both delays were probably the same -- Russian companies desperate to win a stake were unable to raise the needed cash.


United Financial Group oil analyst Alexander Blokhin said the two most likely bidders are officials from Tyumen's rebellious subsidiary Nizhnevartovskneftegaz, which is believed to be seeking 16 percent, and Alfa Group, which is reportedly seeking an 11 percent stake valued at about $200 million. Alfa Group already holds 40 percent of TNK through an investment tender.


"It is possible the bid was deliberately made in such a manner that it would not be accepted, in effect, buying the party concerned more time to raise the money needed for a stake in the holding," United Financial Group wrote Thursday in a report.


Ilya Myagchenkov, a spokesman for Alfa's investment company Novy Kholding, denied his group's bid was canceled and said Alfa was "shocked" to hear of the postponement.


Vladislav Fumberg, Nizhnevartovsk's deputy director, also said he had not heard of the postponement. He said his company had not submitted bids for the shares, although Blokhin noted that any bids would most likely occur through an investment vehicle.


Given the starting price of $847 million for the entire stake, Alfa would require $200 million for its 11 percent, a sum analysts said could be difficult to arrange after the recent market turmoil.


"I think the auction will resume when the bidders have enough money. ... Bidders for TNK are not as numerous as for Rosneft, and it is in the government's interests to postpone the auction now and get more cash later," Blokhin said.


Rory MacFarquhar, an economist with the Russian-European Center for Economic Policy, said the delay had a wider impact. "It could be viewed internationally that the privatization process as a whole is being delayed," he said. "It's not a great time for postponement given that the government can presently use all the money it can get."