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. Last Updated: 07/27/2016

Far Northern Oil Producer To Spin Off 4 Subsidiaries

Shareholders in an important far northern oil producer voted Tuesday to restructure the company by allowing it to spin off four subsidiaries that will become independent firms working for their former parent company on a contract basis, company officials said.

The Arkhangelskgeoldobycha, or AGD, annual general meeting voted for a plan to divest the company of a Kaliningrad region exploration unit, a construction company in the Nenets autonomous region and two unspecified subsidiaries in the Arkhangelsk region, a company spokesman said.

State oil holding Rosneft, which has a 25 percent stake in AGD, has been opposing the reshuffle, claiming that they are tantamount to asset stripping, Rosneft sources said.

However, Rosneft could do little to stop the major shareholder VA-Invest, controlled by LUKoil, which owns roughly 58 percent of AGD.

There was some good news for Rosneft out of Tuesday's meeting, as a motion to issue an extra 28 million shares of AGD charter capital failed to make it onto the agenda.

AGD has about 2 million shares in its charter and Rosneft's blocking stake could easily have been diluted sufficiently as to have removed the state oil company's power to have any kind of say in AGD.

The Arkhangelsk-based firm's major assets include numerous licenses for crude deposits in the far north Timan-Pechora region. LUKoil has been stressing the importance of the region to the oil company after recent merger talks with Komitek. Last year, AGD produced about 100,000 metric tons of oil.

U.S. major Conoco also holds a 15.7 percent share in AGD, which originally was transferred from LUKoil affiliate VA-Invest's stake.