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. Last Updated: 07/27/2016

Sibneft Buys Belarus' Stake in Slavneft

Sibneft bought out Belarus' 10.85 percent stake in Slavneft for $207 million on Friday, bringing it a step closer to victory in next week's auction for Moscow's 75 percent stake.

"The only bid was from Slavneftbank," said an official from the Belarus Currency and Stock Exchange, Reuters reported. Slavneftbank has said that it represents Sibneft interests.

Sibneft had been in talks with Minsk for weeks over the price of the stake. Minsk repeatedly delayed the tender, trying to bump the price up to at least $250 million.

The acquisition may further help Sibneft, long seen as the front runner in the Dec. 18 auction for Russia's 74.95 percent Slavneft stake. Former Sibneft manager Yury Sukhanov emerged as president of Slavneft after a prolonged fight for control of the company this summer. Sibneft also holds 12.8 percent of Slavneft's shares jointly with No. 4 Tyumen Oil Co. via an investment trust. Through the trust, Sibneft and TNK also have stakes in other Slavneft subsidiaries, including 27 percent of the voting shares in Megionneftegaz, which accounts for about 80 percent of Slavneft's total production.

In addition to Sibneft, only TNK and China's CNPC have publicly announced plans to participate in the auction. State-owned Rosneft and No. 3 Surgutneftegaz are thought to be interested in the stake, while British Petroleum and No. 2 Yukos have stated they will not participate.

And LUKoil waited until Thursday to bow out of the tender, preferring to concentrate on developing its Timan Pechora and north Caspian fields. LUKoil had already issued five-year, $350 million convertible eurobonds and sold a 10 percent stake in an Azeri project for more than $1.25 billion to raise cash for the auction.

Vedomosti reported that LUKoil opted out over fears that it could be left with little to show for its investment if it won the tender. Megionneftegaz, for example, must make a net profit by year's end and pay dividends on privileged shares or the shares acquire voting rights, which could leave Slavneft bereft of control.

The starting price for the 75 percent stake is $1.7 billion. But industry insiders, including Yukos CEO Mikhail Khodorkovsky, have estimated the value of the stake at as much as $3 billion.

The market rewarded Sibneft for its perceived advantage in the auction. Sibneft's share price led the market to climb 5.93 percent to $1.965 on Friday.