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. Last Updated: 07/27/2016

Sibneft Votes to Seize Control of Yugraneft

Sibneft, Roman Abramovich's oil producer, said it took over external management of a Sibir Energy unit that's seeking to regain 49 percent of Sibneft's fastest-growing oilfield.

Sibneft, the biggest creditor of the unit, Yugraneft, voted Monday at a creditors meeting to replace Sibir's representatives, have the court-appointed manager replaced and take over management of Yugraneft's assets, after being barred from a previous meeting.

Sibir, which said the meeting was not legitimate, accuses Sibneft of illegally reducing to 1 percent Yugraneft's stake in the South Priobskoye field, which has enough oil to supply Britain for almost nine months.

Yugraneft filed for bankruptcy in December in an attempt to reclaim the stake under Russian law, and was placed under external administration in April.

"It's probably not a coincidence this is happening during possible talks about Gazprom buying Sibneft," said Zina Psiola, who manages about $200 million in Russia stocks, including Sibneft, at Clariden Bank in Zurich. "Abramovich seems to be selling his Russian assets. With new owners, it would probably be even harder for Sibir to recover the asset."

President Vladimir Putin said at the Group of Eight meeting on July 8 that shareholders of Gazprom, the state-controlled gas company, and Sibneft were in talks about a sale.

The battle for South Priobskoye pits Abramovich, Russia's richest person, against Sibir owner Shalva Chigirinsky and Moscow Mayor Yuri Luzhkov, who has publicly sided with Chigirinsky. Sibir is seeking $2 billion in damages from Sibneft and Abramovich in a British Virgin Islands court, after failing to regain the Priobskoye stake in Russian courts.

"This is an important asset for both Sibneft and Sibir Energy, so we can expect this to escalate," said Kaha Kiknavelidze, an oil and gas analyst at Brunswick UBS in Moscow.

Monday's meeting "has no authority so we refuse to participate, sign any bulletins, or vote," said Igor Serebryakov, the head of the creditors committee elected by London-based Sibir. "A judge will make the final decision."

Luzhkov accused Abramovich of stealing the assets, which Sibir was to contribute to a joint venture with the city and which would have provided the city with enough oil to last 40 years, Kommersant reported last week.

"Sibneft has operated legally with regard to the Sibneft-Yugra joint venture," Sibneft spokesman John Mann said Monday. Sibneft-Yugra is the joint venture Sibneft and Sibir, through Yugraneft, set up to operate the oilfield. "The city of Moscow has never been our partner in these assets, so I don't see the basis for the mayor's comments."

Mann said Monday's meeting, at the Kripton Factory in eastern Moscow, was legal because Sibneft was barred from the previous creditors' meeting on July 19, Mann said.

That meeting was reportedly called by Yugraneft's court-appointed manager, Mikhail Kotov.

Kotov called another meeting for Aug. 9, said Serebryakov.

Sibneft became Yugraneft's biggest creditor after a Moscow court on July 14 upheld the legality of a $40 million loan Sibneft made to the Sibir unit. Sibir is challenging that decision and Sibneft's legitimacy as Yugraneft's major creditor. A court delayed those hearings from Monday to Aug. 3, said Sibir lawyer Dmitry Afanasyev.

A British Virgin Islands court ordered Sibneft and Abramovich to set aside assets worth at least $1 billion until a court-appointed manager takes control of the disputed shares, Sibir said last month.

The initial ruling was amended and the defendants will challenge the court's jurisdiction on Sept. 20, Sibir said in July.

Sibneft, Russia's fifth-biggest oil producer, expects the 465 million-barrel South Priobskoye field to provide about a quarter of its total output by 2010, excluding its half of Slavneft, which is 50 percent owned by TNK-BP, BP's Russian venture.