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. Last Updated: 07/27/2016

No Clear Winner for Onako’s Oil

Sibneft’s surprise sweep of board seats at oil producer Orenburgneft left industry watchers wondering Friday who had actually come out the winner of last month’s tender for the unit’s parent company, Onako.

Investors in Orenburgneft, which holds about 95 percent of Onako’s proven reserves, gave oil giant Sibneft six of the nine seats at a shareholders meeting Thursday.

Sibneft’s arch-rival the Tyumen Oil Co., or TNK, paid just over $1 billion for an 85 percent stake in Onako last month.

Sibneft, which had also participated in the auction, snapped up a 40 percent stake in Orenburgneft from oil major Yukos just before the Onako sale.

Now, with the Orenburgneft board in Sibneft’s hands, TNK is in danger of being left with a worthless Onako.

Sibneft and TNK are holding their cards close to their chests while publicly remaining courteous to each other.

"The appointments are temporary until the next extraordinary shareholder meeting is held," Sibneft president Yevgeny Shvidler said in a statement Thursday.

TNK, in turn, said it has no doubt that its interests will be respected.

TNK can call an extraordinary shareholders meeting once it takes full control of its stake in Onako, but the company would not say Friday if it had done so.

However, a meeting can only be held 45 days after shareholders are given notice, thus leaving Sibneft with a window of at least 1 1/2 months to divert Orenburgneft’s cash flows away from Onako.

Analysts say Sibneft may be hoping for a cash deal with TNK or a swap under which the Orenburg shares would be traded for a 25 percent stake in Onako.

Sources close to negotiations between the two oil majors said earlier this week that the cash and swap options were being considered.

"I do not know what kind of game they [Sibneft] are playing," says Steve Allen, oil and gas analyst with Renaissance Capital. "It seems that they are improving their negotiating position."

"We believe the most probable subsequent scenario will involve a share consolidation of Onako and Orenburgneft, which would give Sibneft its desired 25 percent stake in Onako," Troika Dialog said in a report Friday.

But Allen disagreed. "I have the impression that they do not want a blocking stake in Onako, but are trying to increase the sales price," he said.

Any negotiations may also include the state-owned Slavneft oil company, some analysts said. TNK could offer to keep out of any future sell-off of Slavneft in exchange for the Orenburgneft stake.

But others said Sibneft was probably not interested in Slavneft as its privatization has been put on hold.

TNK President Simon Kukes announced late Friday night that Sberbank will extend a credit line of $300 million to $500 million to the oil company, Prime-Tass reported. Sberbank had previously agreed to lend up to $300 million, and the new deal increases that deal by $200 million — money that could well be used to buy the Orenburgneft stake.

Kukes said the loan will be used for "technical needs," Prime-Tass said.

In the meantime, Sibneft could test TNK’s mettle by stripping some of the assets from Orenburgneft if talks don’t move along fast enough, analysts said.