. Last Updated: 07/27/2016

Russneft Faces Probe Over Oil-Tax Evasion

Police have raided the offices of fast-growing oil company Russneft and questioned its president, Mikhail Gutseriyev, over suspicions that the company evaded taxes, the Interior Ministry said Monday.

Gutseriyev and other company executives were questioned last week as witnesses, the ministry's investigations committee said in a statement, Interfax reported. The ministry provided no further comments.

Russneft confirmed the raid and the questioning in a statement on its web site, adding that investigators had confiscated "some documents that were necessary for the investigation."

Russneft said the raids were part of an earlier investigation into suspicions that its three production units sold more oil from 2003 to 2005 than their licenses permitted.

Beginning that investigation in November, the Prosecutor General's Office said the units extracted and sold extra oil worth 7.7 billion rubles ($290 million). The company denied any wrongdoing in the statement and said it hoped for a fair investigation.

The reason behind the legal onslaught is that Russneft had hoped to prevent Gazprom Neft, a subsidiary of Gazprom, from buying oil company Slavneft's stakes in Belarus from TNK-BP and the Belarussian government, Kommersant reported Monday, citing an unidentified senior Interior Ministry official.

Slavneft owns the Mozyrsky refinery in Belarus. Russneft, through its unit Slavneftekhim, supplies crude oil to a number of Belarussian refineries and later sells the oil products inside Belarus or abroad. Gutseriyev, president and majority owner of Russneft, headed Slavneft until his ouster in 2002. Later that year, he created Russneft from scratch.

Analysts said Russneft could be interested in Belarussian assets but that it was unlikely to get in a damaging public fight over them.

Konstantin Batunin, an oil analyst at Alfa Bank, said Russneft would not confront a state-controlled company such as Gazprom Neft. "Russneft managers are smart people. They understand what the consequences could be," he said.

Any wrangling over acquisition of assets in Belarus would seem odd because of political instability in the country's relations with Russia, said Andrei Gromadin, oil analyst at MDM Bank. An investigation by authorities would have been too harsh a measure in a fight over a single refinery, he added.

It is quite possible for an oil company to exceed allowed production limits, both analysts agreed. "Maybe the powers-that-be who used to support the company lost their influence and the company became more vulnerable," Batunin said.

The probe could hurt Russneft's relations with its creditors, Gromadin noted. The company has debts of close to $3 billion, he said.

Gutseriyev, who owns 70 percent of Russneft, built the company to impressive dimensions in just three years with the help of Swiss-based commodities trader Glencore. Russneft produced about 17 million tons of oil in 2006, it said on its web site.