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. Last Updated: 07/27/2016

Rosneft: No Plan to Buy Yukos Assets

Itar-TassBogdanchikov arriving for Thursday's news conference on Rosneft's plans.
State oil company Rosneft has no plans to buy assets still held by embattled oil major Yukos and is sticking to its plan for a listing as early as July, company president Sergei Bogdanchikov said Thursday.

Speaking at the company's headquarters, Bogdanchikov also outlined a plan to pour $3 billion per year into raising production over the next decade, though he gave few details on how the money would be spent.

His comments come amid speculation that Rosneft's recent purchase of $482 million in Yukos debt owed to foreign banks, which have asked a Moscow court to declare Yukos bankrupt, was a move to acquire Yukos' remaining assets. The purchase made Rosneft Yukos' largest creditor.

Bogdanchikov denied that acquiring Yukos assets was in Rosneft's current plans, but left the door open for a change in policy. "Yukos assets are not part of the plan for achieving our company's goals" in increasing production, Bogdanchikov said."There are all kinds of sales. When something interesting appears, we take it all into account. But we will not initiate processes to buy any active enterprises," he said.

Yukos still has two production units, five refineries in Russia and a majority stake in Lithuanian refinery Mazeikiu Nafta. The Moscow Arbitration Court will hear the bankruptcy case on March 28.

On the company's IPO, Bogdanchikov said Rosneft intended to list in July, reaffirming comments made this week on a visit this week to China. Rosneft's IPO had previously been expected later in the year.

Shares would most likely be sold on exchanges in Russia and London, Bogdanchikov said. He had previously said Rosneft was considering listing in New York, Tokyo and Frankfurt.

Staying off U.S stock markets would let Rosneft avoid the strict financial disclosure requirements set by the U.S. Securities and Exchange Commission, said Adam Landes, oil and gas analyst at Renaissance Capital.

Speaking about potential strategic investors, Bogdanchikov said: "We would be happy to see China National Petroleum Corp. and also British companies among our shareholders."

Landes said he put little stake in the announcement. "At end of the day, it's his job to create pricing tension, and it comes from those kinds of statements," he said. "It's very clear that companies across the world are interested in cementing their cooperation with Rosneft. ... There will be significant competition" for strategic stakes.

Rosneft plans to spend $30 billion over the next decade to increase production to 2 million barrels per day by 2015 and 2.9 million bpd by 2020, Bogdanchikov said.

Bogdanchikov said the company produced 1.48 million bpd in 2005, when its output rose by roughly 200 percent following its acquisition of Yuganskneftegaz, Yukos' main production unit, in a forced auction in December 2004. Future production increases would come from developing existing assets and new sites that the company will bid for, including in the North Sea and at Sakhalin-3 in the Far East.

Oil major LUKoil, by contrast, is planning to spend $4 billion to $5 billion annually on increasing production, Landes said.

U.S. energy giant ExxonMobil is likely to spend $8 billion to $12 billion on development and exploration this year, said Thomas Gochenour, oil and gas analyst at MDM Bank. But with future oil prices uncertain, "I don't think they're going to tell anybody they'll be doing it for 10 years in a row," he added.

While Rosneft's $3 billion figure "shows they're very ambitious," Gochenour said that a lack of long-term strategic planning was among the factors that made Rosneft's target of raising $20 billion in its IPO "well wide of the mark."

Also likely to limit investors' interest are the company's poor profitability in the past, a lack of financial transparency and Western investors' growing caution toward emerging markets, Gochenour said.

"I think they'll be lucky if they place $10 billion," Gochenour said. "This is not a quality, blue-chip company. It's not even a growth company. Ask them what their concrete plans are for development [of major assets], and it's not quite clear."