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. Last Updated: 07/27/2016

Roadblock Lifted for a Sibneft Buyout

A Moscow court removed the final roadblock to a possible Gazprom buyout of Sibneft on Wednesday when it handed full control of Sibneft back to a group of shareholders led by Roman Abramovich.

The Basmanny District Court lifted an asset freeze on a 14.4 percent stake owned by Yukos, and the shares were immediately returned to Sibneft in exchange for an 8.8 percent Yukos stake.

The swift swap leaves Yukos without a blocking stake in Sibneft and means that Gazprom can snap up a controlling stake in the oil company.

"I think we're closer to the endgame on Sibneft. Gazprom is now much more certain to be buying it," said Stephen O'Sullivan, co-head of research at United Financial Group.

"Sibneft will go to Gazprom. [I'm] just not sure when," he said.

President Vladimir Putin earlier this month indirectly confirmed reports indicating that Gazprom might buy Sibneft. "I know that Gazprom and Sibneft representatives discussed this deal," Putin told reporters during the Group of Eight summit in Scotland.

Putin's remarks came as speculation mounted that Abramovich was in talks to sell his majority 57.7 percent stake in Sibneft and following a company announcement that it would pay a record $2.3 billion in dividends for 2004.

Wednesday's ruling whittles down Yukos' stake in Sibneft to just 20 percent, effectively finalizing the breakup of the YukosSibneft merger, which would have been the world's fourth-largest oil company. The merger fell apart during the legal assault on Yukos and its core shareholders, which is widely seen as the Kremlin's punishment for founder Mikhail Khodorkovsky's political and economic ambitions.

The Sibneft shares, like most of Yukos' assets and funds, had been frozen by the tax authorities and the Prosecutor General's Office since 2004 as part of the state's pursuit of some $27.5 billion in back taxes.

The Basmanny ruling followed an annulment by the Chukotka Arbitration Court of a 2003 share swap between Yukos and Sibneft. In the swap, Yukos got 72 percent of Sibneft and Sibneft got 26.1 percent of Yukos. An additional stake of 20 percent minus one share in Sibneft was purchased by Yukos for $3 billion, leaving Yukos with 92 percent of Sibneft.

Last year, an additional share issue that Yukos used to acquire a 57.5 percent stake in Sibneft was annulled by arbitration courts, depriving Yukos of control of Sibneft. However, Yukos continued to hold onto a blocking stake in Sibneft until Wednesday.

Depriving Yukos of the blocking stake will give Abramovich more bargaining power with Gazprom, said Kakha Kiknavelidze, a senior oil and gas analyst with Brunswick UBS.

"But given the swiftness of this latest swap, there is one question that immediately comes to mind: Has the deal on the sale of Sibneft already been reached?" Kiknavelidze said.

Sibneft's market capitalization is about $15.8 billion.

Sibneft spokesman John Mann confirmed that the share swap took place Wednesday.

He refused to discuss what might happen next. "We have always said that [the unwinding of the merger] is a step-by-step process. The current phase is nearing completion, and it is too early to talk about the next one," he said.

Yukos officials were not available for comment late Wednesday.

Analysts suggested that the remaining Sibneft shares would be stripped from Yukos only if and when Yukos is shut down. The company -- which lost its core production unit, Yuganskneftegaz, to Rosneft late last year over back tax claims -- is expected to keep losing assets.

"The next set of assets to be lost might be taken more discreetly, through the use of commercial litigation going through the courts at the instigation of Rosneft via Yugansk rather than tax claims," O'Sullivan said.

Rosneft is in technical default after accumulating a debt of $20 billion since its purchase of Yugansk for $9.3 billion. Analysts have said that given Rosneft's financial situation, it is unlikely to be able to buy another Yukos asset.

Rosneft-managed Yugansk has filed multibillion-dollar lawsuits against its former owners over past oil sales and assets transactions.