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. Last Updated: 07/27/2016

Luzhkov, Abramovich in Talks on Refinery

Oil magnate Roman Abramovich and Moscow Mayor Yury Luzhkov are in talks to resolve a dispute over the Moscow Oil Refinery that has twice brought the city to the verge of a gasoline crisis.

Abramovich's Sibneft and City Hall, which owns 50.66 percent of the Moscow refinery through the Moscow Oil Co., have been fighting for control of the refinery and lucrative crude supply contracts for more than a year.

"Talks are being held to find a compromise on how to manage the enterprise," Sibneft spokesman Alexei Firsov said Monday.

Moscow Oil Co. spokesman Nikolai Fralov said the two sides were in negotiations and that details would be available before an annual shareholders meeting scheduled for Nov. 18.

Moscow Oil says Sibneft has been trying to take control of the refinery since it acquired a 38.5 percent stake from oil major LUKoil last year.

Sibneft denies that it wants to take over the refinery and is hoping to come to an agreement that would make the refinery's management independent of all major shareholders.

The conflict between City Hall and Sibneft came to a boil this summer when the oil major cut off supplies to the Moscow refinery, which produces 50 percent to 55 percent of the gasoline sold in Moscow and the Moscow region, bringing the city's gas supplies to a dangerous low.

That conflict was resolved in a telephone call between Luzhkov and Abramovich.

Sibneft later called a shareholders meeting for September at which the oil major elected six representatives to the nine-member board of directors. Sibneft's ally, Tatneft, which holds 8 percent in the refinery, had three representatives elected. The new board later approved a share conversion that gave Sibneft and Tatneft a 56 percent stake in the refinery.

Moscow Oil, however, says the shareholders meeting at which the board of directors was elected was not legal because Moscow Oil was not notified that the meeting was taking place.

The refinery now has two rival boards of directors.

Moscow's gas supplies nearly came to halt for a second time in October when pipeline monopoly Transneft cut off oil supplies to the Moscow refinery after a court ruling in Orenburg.

Sibneft filed the Orenburg suit, saying Moscow Oil's supply contracts with the Moscow refinery were illegal because the company's head, Shalva Chigirinsky, also sits on the refinery's board of directors.

Moscow Oil says the refinery lost more than $3.7 million because of the gasoline shortages and wants Sibneft to pay up.

Sibneft declined to comment.

Chigirinsky has expressed hope that the rival boards of directors would meet at the shareholders meeting. "I don't exclude the possibility that the November shareholders meeting will be held cooperatively," Vedomosti quoted him as saying.

First Deputy Mayor Oleg Tolkachyov said Sibneft has fulfilled Moscow's request to withdraw all lawsuits against Moscow Oil.

Sibneft was "pressed with an ultimatum," Interfax quoted Tolkachyov as saying.

Sibneft has filed more than 10 law suits against Moscow Oil, Fralov said.