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. Last Updated: 07/27/2016

Transneft Managers Refuse to Work With New Boss

The day after armed Interior Ministry troops clad in balaclavas chainsawed their way into the head office of Transneft to install newly chosen chief executive Semyon Vainshtok, the rest of the company's management decided Friday to boycott the firm in protest at the abrupt change in leadership.

"None of Transneft's administrative board appeared at work today," said Andrei Vazhnov, a spokesman for deposed Transneft boss Dmitry Savelyev.

"They [the board] collected at their meeting yesterday and unanimously denounced the decision to replace Savelyev as unlawful and decided not to cooperate with Vainshtok," Vazhnov said in a telephone interview Friday.

Vainshtok's spokesman was not available for comment Friday.

The decision to fire Savelyev was taken last Friday, by First Deputy Prime Minister Nikolai Aksyonenko without the official approval of Prime Minister Vladimir Putin who had left for New Zealand.

Having hastily called a shareholders meeting Monday, Aksyonenko replaced Savelyev with Vainshtok, a vice president at Russia's largest oil firm LUKoil. The state owns a 75 percent stake in Transneft.

Some analysts have said that the decision to sack Savelyev was politically motivated. The former Transneft boss is from Nizhny Novgorod, hometown of Right Cause political party leaders Boris Nemtsov and Sergei Kiriyenko, to whom he is said to be close.

Also, Aksyonenko has had his eye on Transneft since soon after he was made first deputy prime minister.

His appointment in May was accompanied by a series of personnel changes at the top of some of the more lucrative state entities. Savelyev looked likely to lose his post then, but managed to hang on.

Vainshtok's appointment is probably linked to LUKoil's strong interest in Transneft and its similarly strong ties to Fuel and Energy Minister Viktor Kalyuzhny.

However, LUKoil - while denying politics has anything to do with the move - says it would rather that Vainshtok was still with the company where he can lobby for its interests, LUKoil spokesman Denis Dolgov said Friday.

"At Transneft he will stand for the state's interests only," Dolgov said.

Vainshtok's appointment may well spell hard times for the plan to build a pipeline system connecting the oil fields of the Timan-Pechora region in northwest Russia, a project several oil firms have been against for some time, Vazhnov said.

"The oil companies were not satisfied because Transneft's plan to build the BPS [Baltic Pipeline System] required them to pay a [specially created] investment tariff on it [of $1.43 per exported ton]," Vazhnov said.

The first decision to build the oil and gas port in Primorsk town located at the Gulf of Finland in Leningrad region - to where the BPS must be extended from Timan-Pechora - was taken in 1993 by Viktor Chernomyrdin's administration.

Meanwhile, the style of Savelyev's dismissal was harshly criticized by some observers.

"Kalyuzhny has no understanding of the laws of a market economy," said Steven Dashevsky, oil analyst with Aton brokerage.

"They just decided to do this and did it. All the civilized business world is simply shocked. It is not the war that pushes away investors - look, Israel has been waging war for decades, but its stock exchange is developing rapidly."

The official explanation for Savelyev's dismissal was bad management.

"Federal property was used inefficiently. Savelyev does not properly know this complex and does not solve its problems," Aksyonenko said Wednesday in Khanty-Mansiisk. "The decisions made are absolutely legal," he added.

Over the past six years Transneft paid dividends only once and the "financial losses" of the company reached 495 million rubles ($49.5 million) in 1998, Deputy Fuel and Energy Minister Vladimir Stanev said Tuesday at a briefing.

Transneft's own financial statement for 1998 - carried out to Russian accounting - states that the firm made pretax profits of 3.5 billion rubles, 1.4 billion rubles more than in 1997. Its debts were 607.3 million rubles.

- Eduard Gismatullin contributed to this report.