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. Last Updated: 07/27/2016

New Boss Has Ambitious Vision for Slavneft

The newly appointed president of state-owned Slavneft oil company has announced ambitious plans to dramatically improve the firm's efficiency and output.

The main goal of the company is to raise production levels from their current level of 12.5 million metric tons a year to about 20 million metric tons, new Slavneft boss Mikhail Gutseriyev said last week. According to Gutseriyev, the goal is to be achieved by a 5 percent to 10 percent yearly increase.

Gutseriyev also promised to improve the company's cash flow by requesting 100 percent prepayments for oil and refined products delivery, developing Slavneft's own filling stations network, as well as expanding into the international arena, especially the Middle East.

"I'm personally acquainted with Muammar al-Qadhafi, Saddam Hussein, and I know the presidents of Iran and Algeria," Gutseriyev was quoted by Interfax as saying.

However, several oil sector analysts doubted Gutseriyev's capacity to carry out his ambitious schemes, which could readily fall prey to both political and economic hazards.

Gutseriyev - appointed to head Slavneft last month - presented his new program for the company at a series of press conferences last week.

Gutseriyev's extensive international acquaintances take roots in his previous job as one of the State Duma's deputy speakers in the last parliament. While in the legislature as an LDPR deputy, Gutseriyev coordinated the work of the State Duma's industry, construction, transport and energy committees.

Slavneft, Russia's eighth-largest oil producer, is jointly owned by Russian and Belarussian governments with the Russian State Property Ministry controlling 74.95 percent and the State Property Ministry of Belarus holding 10.8 percent. The remaining 14.25 percent of the company's shares are held by various entities, none of which possess the 10 percent stake over which their ownership must be declared.

In addition to several refineries, Slavneft owns the Megionneftegaz production unit, which produces practically all of the holding's crude oil. Gutseriyev said the planned increase in production levels could be achieved in developing new oil fields in eastern Siberia.

Analysts were skeptical of the viability of Gutseriyev's plans.

According to Jim Henderson, an oil analyst with Renaissance Capital, any projects aimed at increasing Slavneft's production would have to involve large scale investment that is unlikely to materialize until after the company is privatized.

However, Gutseriyev has already said no privatization plans will be given the go-ahead until 2001 at the earliest.

Megionneftegaz, meanwhile, is an aged production unit, which these days pumps out as much as 85 percent water, Henderson said. Any attempt to increase Megionneftegaz's production levels would also require extra funds.

Steven Dashevsky, an oil analyst at Aton brokerage, said it is simply not believable that Gutseriyev will stay in office long enough to achieve his stated goals. Dashevsky predicted more reshuffles in Slavneft.

"Gutseriyev's plans are unlikely to be fulfilled since there is such a large interest in Slavneft from several Russian companies, including Tyumen Oil Co.," Dashevsky said.

Segodnya daily last week linked the appointment to struggles between Russian private oil companies to divide between themselves the remaining three state-owned companies - Slavneft, Rosneft and Onako. Segodnya suggested it was Sibneft who wanted to gain control over Slavneft.

Segodnya's report based its speculations on the fact that Yury Sukhanov, a former Sibneft oil major employee, was tapped as first vice president of Slavneft in the recent management reshuffle.

While officials in both companies declined to discuss Sukhanov's role in Slavneft, or name the position he previously held in Sibneft, industry insiders said it was unlikely Sibneft had a direct interest in Slavneft, or its affiliates.

According to Mikhail Delyagin, the director of the Institute of Globalization Problems, Gutseriyev's appointment could have been linked to the state trying to gain more control of its company.

"The previous head of Slavneft [Vasily Duma] was appointed by [then-Prime Minister Sergei] Kiriyenko," Delyagin said.

"A state-owned company is one of the state's resources, thus it is easy to ask the company for political support ... and a company head friendly to the state creates favorable conditions to use the reserves of the company for the needs of the state - for example for the needs of the election campaign."

Political analysts said the Slavneft appointments were mostly about increasing state control.

"The strategy of getting tighter control over state-owned enterprises started to form about a year ago. Back then, although it was unclear who would become [former President Boris] Yeltsin's replacement, it was already clear who should not replace him - people like [Yury] Luzhkov, Yevgeny Primakov or Alexander Lebed," said Sergei Markov, director of the Institute for Strategic Studies.

"The goal was to consolidate financial and media resources - natural monopolies, banks, etc. And that goal is pretty much fulfilled by now."

This is all part of the current trend for the Kremlin to try and place their people at the top of state companies, said Yevgeny Volk of the Heritage Foundation political think tank.

"They are trying to increase the state's influence in oil companies. This could be sensible on the eve of the presidential elections. There are financial flows which need to be under control, so no competitors could accidentally get hold of them," he said.

Meanwhile, Delyagin declined to speculate "whose man" Gutseriyev was.

However, indirect evidence such as Sukhanov's appointment could indicate the company has fallen under the influence of Kremlin insiders such as Kremlin Chief of Staff Alexander Voloshin, and State Duma deputies and powerful tycoons Boris Berezovsky and Roman Abramovich, a Sibneft director widely reported to be the man who really controls Sibneft through a series of shell companies.

Abramovich, who burst into prominence as a major Kremlin player last year, was also reported to be behind the controversial sacking of Dmitry Savelyev as head of state-owned pipeline monopoly Transneft. Spurred on by Abramovich, Fuel and Energy Minister Viktor Kalyuzhny and then-First Deputy Prime Minister Nikolai Aksyonenko - fellow Berezovsky allies - ousted the Transneft boss at an extraordinary shareholders meeting.

When Savelyev locked himself into the Transneft offices, armed troops used chainsaws to break in and eject him.

Kalyuzhny's first act as fuel and energy minister was to raise Sibneft's quota of Iraqi crude under the United Nations oil-for-food program, and he has shown himself to be partial to Sibneft on several occasions since.