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. Last Updated: 07/27/2016

Khristenko Mulls Over Sale of Slavneft

The government is still considering holding a privatization auction for a stake in Slavneft this year, even though the State Property Ministry said last month the sale would not be held before 2001.

Two weeks ago, Deputy Prime Minister Viktor Khristenko ordered that consideration be given to an auction for a 19.68 percent stake in Slavneft this year.

Khristenko’s instruction was sent to the State Property Ministry, the State Property Fund and the Fuel and Energy Ministry.

The government owns a 75 percent stake in Slavneft, which is the nation’s No. 10 oil firm. The Belarussian government has a 10.8 percent stake, and Tyumen Oil Co., or TNK, owns a 12.68 percent stake and holds a large block of shares in its subsidiaries.

TNK and fellow oil majors Sibneft and LUKoil have frequently expressed an interest in Slavneft.

The State Property Fund has valued the 19.68 percent stake in Slavneft at $100 million. However, TNK first vice president Viktor Vekselberg has said the stake could be worth up to $300 million.

So far, only the Fuel and Energy Ministry has answered Khristenko’s request. It only needed a week to come to a decision on the future of Slavneft, though in that time it managed to express two completely different points of view.

"The ministry believes it is possible to support the proposal for the sale of 19.68 percent of the shares of Slavneft at a special auction in 2000," says a draft of a letter obtained by Vedomosti.

The draft argues for the sale on grounds that plans for a state oil company have been shelved and that the timing is good for a Slavneft sale.

Two days later, the ministry wrote an official letter proposing that the sale of Slavneft be transferred to a later date.

This time the arguments were different.

The letter argues that Slavneft’s investment program is capable of raising its market capitalization by 3.4 to 3.5 times up to $1.2 billion to $2 billion by 2003.

In addition, the Fuel and Energy Ministry has already given its consent for the sale of Onako shares this year, with the results of the tender to be announced Sept. 19. The government is still considering floating a 4 percent to 4.5 percent stake in LUKoil as American Depositary Receipts on the New York Stock Exchange.

There is enough money for the budget, therefore, even without Slavneft, the letter argues.

The State Property Fund and the State Property Ministry said that they have yet to officially reply to Khristenko’s instruction.

A government source, however, said Slavneft will not be auctioned this year.

"I do not see any political desire to sell the company in Khristenko’s order. Sometimes the best way of putting something off is to put the matter forward for additional consideration," the source said.