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. Last Updated: 07/27/2016

Rosneftegaz Purchases White Nights for $74M

Croatia's state oil and gas group Ina, slated for privatization later this year, said Monday it had sold West Siberian oil producer White Nights to Rosneftegaz for $74 million.

"The transaction was completed on Aug. 2 and now only some final financial and legal elements are being sorted out," an Ina spokesman said, adding that Rosneftegaz should not to be confused with state-owned oil company Rosneft but was related to Personal and Business Solutions SA, based in Geneva.

However, Rosneft and Gazprom reportedly formed Rosneftegaz as a joint venture in December 2001.

Ina acquired two oil fields in western Siberia in 1999 for $20 million, but a year later came into conflict with local authorities, who challenged the technical aspects of the operation.

The authorities, citing the White Nights oil meter's poor technical standards, denied them access to the Transneft pipeline system in March this year, prompting the company to start piling up losses.

"Our business conditions were seriously aggravated, and the climax was when the authorities blocked us from bringing oil to the market, which has forced to sell the entire White Nights, and not only 50 percent as we had planned," the spokesman said. "While we do not want to elaborate on why they did that, we may point out Russia's oil strategy, which wants Russia to become a major global player and to own all capacities in its territory," the spokesman said.

White Nights produced about 760,000 tons of oil in 2001, accounting for more than one-third of Ina's total output of 2 million tons of crude. The two oil deposits in western Siberia have 10 million tons of oil in explored reserves, news agencies reported.

Ina includes two refineries in the cities of Rijeka and Sisak that together processed 5.278 million tons of oil in 2000. The total capacity of these plants is 8.5 million tons. Ina also owns a network of 400 gas stations in Croatia and other countries from the former Yugoslav Federation and holds 38 percent in the Adria pipeline.

The spokesman said the sale would not threaten Ina's supply of the domestic market in Croatia "as we buy a large deal of crude on the free market anyway."

Three major Russian oil firms, Tyumen Oil Co., Slavneft and Rosneft had earlier this year failed to reach a deal on the acquisition of White Nights with Ina.

Ina is up for sale itself.

The government has shortlisted five bidders for a 25 plus one share stake in the company: Austria's OMV, Hungary's Mol, LUKoil and Rosneft, and Italy's Edison Gas. The selloff is expected to be completed in the first quarter of next year.

(Reuters, MT)