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. Last Updated: 07/27/2016

Sibneft Initiates Electronic Exchange




Sibneft director Roman Abramovich, Railways Minister Nikolai Aksyonenko and Semyon Vainshtok, the head of the Transneft oil pipeline monopoly, are teaming up to form an electronic stock exchange for trading oil, petroleum products, electricity and natural gas.


Sibneft, which initiated the project, calls it a revolutionary step and estimates $100 million will be invested in it. The nation's No. 7 oil firm says turnover will be in the initial stages in the tens of millions of dollars, however the project doesn't even have a business plan yet.


Sibneft said in a statement it is planning to make Energy Trading Systems the main trading floor for the nation's oil. So that the massive project will attract as many oil traders and oil products as possible, it includes among its founders Transneft, oil products transporter Transnefteprodukt and the Railways Ministry. Virtually all oil and petroleum products in the country pass through their systems.


The distribution of shares among the founders of ETS has yet to be confirmed, but Transneft said its stake would not be large - 5 percent would be enough.


"We intend to organize trading just as it takes place on the major world floors. The involvement of transport companies allows us to sell oil delivered to a particular point just as [national benchmark] Urals blend crude, for example, is sold and delivered to Rotterdam," said a Sibneft source, who declined to be named.


However, oil products, not crude oil, will be the first goods traded on the exchange, because "the oil product market is more transparent," the Sibneft representative said.


The organizers of the exchange plan for the first sales to go through at the end of the year or early 2001 and in the meantime Sibneft intends to attract a consultancy firm to develop a business plan.


Sibneft representatives said any oil and trading companies were welcome to join in founding the exchange on equal terms. However, it seems that oil officials are hardly burning with enthusiasm.


Nafta Moskva, one of the nation's biggest oil trading firms, said it has no intention of working through an exchange.


A source close to Yukos, the nation's No. 2 oil company, said that if it needs to sell its goods through an exchange then it will set up its own.


Meanwhile, German-based corporate information system developer SAP said in a statement that the nation's No. 3 oil producer, Surgutneftegaz, intends to create its own Internet trading floor for oil and gas. Surgutneftegaz will initially use the site to buy materials and equipment before developing it for oil and gas deals.


In addition, the government has for six months been trying to organize mandatory stock exchange trading of oil and oil products in order to tax companies at market prices for their goods. Unable to find an administrative means of making companies trade through a stock exchange, the government recently put a draft of the corresponding amendments to the law on commodities exchanges to the State Duma for approval. If they are adopted, stock exchanges set up by oil companies are expected spring up like mushrooms.


"On one's own stock exchange it is possible to continue to form a pseudo-market price that in reality will remain intra-corporate," said Vladimir Nosov, director of Fleming UCB brokerage.


The head of the Duma committee for commodity exchanges, Konstantin Parmenenkov, said that in his opinion electronic floors have no connection with the existing stock exchange. "An Internet floor is a notice board, not an exchange at all. An exchange must have a license and be regulated by the law on the commodities markets," Parmenenkov said.


Moreover, as Vedomosti discovered, Sibneft has a competitor. On May 31, the first transaction involving oil products will take place on the real, not virtual, licensed European-Asiatic exchange.


A Fuel and Energy Ministry source, who spoke on condition of anonymity, said the exchange includes companies affiliated with one of the major oil companies.