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. Last Updated: 07/27/2016

LUKoil Will Float Stake Of 6 Percent In London

VOLGOGRAD, Southern Russia — Russia will list a 6 percent, $630 million stake in LUKoil in London instead of New York to sidestep any political dispute with the United States over sanctions against Iraq, a LUKoil official said.

The official said the Russian government through its State Property Fund and LUKoil had agreed on the London Stock Exchange.

"The government decided — and we have supported that decision — to make the issue on the London market in order to avoid the political risk that exists [in the United States]," LUKoil vice president Leonid Fedun told journalists.

Among the political risks named by Fedun were sanctions against Iraq — where LUKoil has been involved in oil-for-food deals — and other countries that the company has contacts with, including Sudan and Iran.

"It is completely possible that [U.S. officials] could ban companies carrying out an issue from working in these regions, so we have decided to work in a better political environment with a full listing on the London Stock Exchange," he said.

Fedun added that the government's income from the sale of the stake would not be hurt by the change.

The sale of 6 percent in LUKoil through a Level 3 American Depositary Receipt listing was to be Russia's main privatization project for this year, and the government hopes it will net at least 18 billion rubles ($630 million). The government owns 15 percent of LUKoil.

The Vremya Novostei newspaper Thursday quoted State Property Fund head Vladimir Malin as saying the listing could be expected in October or November, pending market conditions.

LUKoil president Vagit Alekperov told another newspaper, Izvestia, that the best time for the deal would be September or October.

Alekperov also said LUKoil has received preliminary permission from Venezuela to compete for oilfield development rights there.

Venezuelan officials said last month they had begun talks with LUKoil on an oil deal whereby Venezuela supplies LUKoil's U.S. gasoline stations in return for Russian crude oil to Venezuela's German refineries.

Meanwhile, LUKoil's auditor said Thursday that consolidated 2000 financial results to Generally Accepted Accounting Principles will be ready in two weeks' time.

"KPMG is at the final stages of its audit. Outstanding issues relate purely to the process of audit," KPMG chairman Roger Munnings told a news conference in Volgograd, where LUKoil was holding its annual meeting Thursday.

The market had expected the results would be released at the annual meeting.

Another LUKoil vice president, Alexander Matytsin, said the company was expecting a hefty difference between its 2000 GAAP net profit and its Russian standard net profit because of $800 million in amortisation charges in its GAAP accounts and $300 million in its Russian accounts.

LUKoil's 2000 Russian standard net profit minus minority interest was 96.4 billion rubles ($3.31 billion), the company's annual report said.

At the meeting, shareholders approved a 59.16 rubles 2000 dividend per preferred share and a 8.00 ruble dividend per ordinary share.

The company paid 17.45 rubles per preferred share and 3 rubles per ordinary share in dividends for 1999. Both shares have a nominal value of 0.025 ruble.