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. Last Updated: 07/27/2016

CFC Transferred to MOC Ownership

An extraordinary meeting of shareholders of Moscow-based Central Fuel Co. agreed Monday to transfer management powers to the recently created Moscow Oil Co.

The oil refining holding shareholders also dismissed CFC president and oil veteran Yury Shafranik, a MOC spokesman said.

Shafranik will keep his post as chairman of the Fatherland-All Russia election bloc's energy commission. The former fuel and energy minister is supposed to advise the bloc's Duma candidates on their policy regarding the country's energy issues. Fatherland founder Moscow Mayor Yury Luzhkov heads the MOC board of directors.

"Our aim is to create a vertically integrated oil company with production and refining businesses," MOC managing director Vadim Varshavsky said Monday. "MOC production assets will be founded on the Salym and Shapshinskaya oil-field groups and the South Priobskoye deposit assessed at 4 billion barrels of geological recoverable reserves."

CFC supplies about 60 percent to 70 percent of the Moscow retail fuel market. It operates 96 filling stations, mostly in the Moscow region, via its 51 percent stake in retail firm Mosnefteprodukt.

All these oil fields are in the Khanty-Mansiisk autonomous region in northwestern Siberia. The Salym group consists of the West Salym, Upper Salym and Vadelyp oil deposits. A 50:50 joint venture between Evikhon oil company and world major Shell - Salym Petroleum Development - was created last year to develop the field under a production-sharing agreement. Varshavsky also serves as president of Evikhon.

The Shapshinskaya group is being developed by the Aki-Otyr production unit. Yugraneft holds a license for the South Priobskoye deposit.

Luzhkov transferred CFC to MOC as of late October. The move will allow the Moscow government to secure a 25 percent stake in the venture. A trio of obscure firms, Marion Alyans, Ost-Kontrakt and Baston-Torg, will secure the remaining equal stakes in MOC by contributing their upstream assets in Siberia.

MOC's initial charter capital is valued at just 83,490 rubles ($3,143). But Troika-Dialog investment bank currently values MOC future assets and is expected to present its results next month, which are due to be followed by an issue of shares in the company.

In summer 1998, Evikhon, Yugraneft and Aki-Otyr agreed to join forces for exploration projects in Western Siberia. The firms were set up with the help of local authorities and have various affiliations with such firms as Magma, Sibir Energy, Sinko and Uvatneft. All together the firms have produced about 210,000 metric tons of oil over nine months, according to the Energy Intelligence Group.

Ironically, in the spring, British-based Sibir Energy took over independent producer Eurosov Energy. Shafranik's brother, Sergei Shafranik, was a Eurosov director at that time.

MOC is expected to invest heavily in the development of its retail fuel network in Moscow. The company plans to build about 200 new filling stations in the long term, MOC president Ernest Bakirov said.

Petrolcomplex, a BP Amoco joint venture with construction firm ST Group, which operates 17 retail stations in Moscow, is also in talks with MOC about possible joint projects. "Our partner, ST Group, is involved in the Moscow Oil Co. and, thus, we are in talks," Petrolcomplex general director Jeff Franks said Monday. The joint venture plans to open six more filling stations by spring 2000.

The Oka-Oil company is also expected to participate in MOC's creation. The construction and oil marketing firm runs a modern tank farm at Serpukhov, a town in the Moscow region. Oka-Oil is involved in an ambitious $700 million project to construct a refinery near the town of Kolomna with an annual capacity of 4.5 million tons.