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. Last Updated: 07/27/2016

Differences Threaten Yukos-Sibneft Talks




A top Yuksi official lent credence to rumors of squabbles in Yukos' massive oil merger with Sibneft on Wednesday when he told reporters of tension in shareholder negotiations.


Yuksi Vice President Platon Lebedev said Yuksi will emerge as a holding company only after each shareholder's position in the merged empire is carefully evaluated. The final papers creating Russia's largest oil major out of oil companies Yukos and Sibneft are meant to be signed early this summer.


But market watchers have maintained during recent weeks that a power squabble between Yukos and Sibneft may be derailing talks. Lebedev's Wednesday comments, made at a press event in St. Petersburg, hinted that discussions have been tense.


Yuksi is now "evaluating the real monetary interests of each of the shareholder companies," Interfax quoted Lebedev as saying. "Meticulous work with virtually ever shareholder will have to be done."


Oil analysts have suggested that Sibneft may be asking for more than the 40 percent of Yuksi it has been promised in preliminary agreements. But Lebedev said renegotiating ownership stakes is out of the question.


"Considerable changes have taken place in shareholder structure," he said without elaborating. "However, the 60 percent and 40 percent ratio in the stakes held by Yukos and Sibneft cannot be changed."


A Yuksi spokesman said there are "no problems with shareholders." Lebedev "thinks this is one of the most difficult moments in the merger," the spokesman said of the Yuksi executive's comments.


Some oil analysts said the companies, despite disputes, will go through with the merger if only to save their reputations.


"I do not believe they will part ways because confidence in both Sibneft and Yukos will be strongly undermined," said Alexander Blokhin, an oil and gas analyst with United Financial Group.


Rumors of instability surfaced after an April 18 meeting of all Yuksi member companies in Samara. Yuksi had announced it planned to cut oil production and lay off some employees in the face of depressed world oil prices, and the holding company's subsidiaries met to discuss the impact of cuts on each company, the Yuksi spokesman said.


Oil analysts say the merger was heavily debated at the meeting, with a variety of financial and political factors causing concern. One analyst, who spoke on conditions of anonymity, said Yukos' debt load is a stumbling block.


Yukos has borrowed about $1.2 billion in recent months, offering its oil exports as a guarantee of payment. But since oil prices have dropped dramatically, the company has asked Sibneft to help it meet its loan obligations, the analyst said.


"If Sibneft does not want to finance the Yukos payments, Yukos could say, 'we'll give you 5 percent more in Yuksi,'" he said.


Political differences between the two moguls creating Yuksi could also be an obstacle. Sibneft investor Boris Berezovsky's recent political posturing has irritated the Kremlin and also Yukos-Rosprom head Mikhail Khodorkovsky, who prefers to keep a low political profile, Blokhin said.


"I had heard Khodorkovsky had hoped to receive some federal [budget funds] to channel through his bank but he is afraid that if Berezovsky acts against Yeltsin, that means the government will not give Menatep the right," Blokhin said.


Bank Menatep belongs to the Yukos-Rosprom group.


Yuksi's Lebedev also said Wednesday the company is considering compensating U.S. oil major Amoco for its investment in the Siberian oil field Priobskoye.


Yukos and Amoco agreed in 1993 to develop the field jointly. But development stalled after Yukos suggested it would develop the field without Amoco, after the U.S. company had already invested about $130 million in the field.


Lebedev implied Amoco could be compensated with stock in Yuksi if the project doesn't materialize.