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. Last Updated: 07/27/2016

Vainshtok a Tough Act to Follow

APPutin holding a meeting in Novo-Ogaryovo on Tuesday with Vainshtok, who steps down as Transneft CEO on Thursday.
The new head of Transneft, who is yet to be named, should make the company more open to investors but keep business operations as efficient as the outgoing company president, Semyon Vainshtok, analysts said Wednesday.

Vainshtok, whose term ends Thursday, will head a state company that is to be created to prepare the Black Sea port of Sochi for the 2014 Winter Olympics. Vainshtok and President Vladimir Putin agreed on the move in a meeting Tuesday.

The Kremlin and the government revealed nothing about Vainshtok's replacement Wednesday, however. Kremlin spokesman Dmitry Peskov said the government would announce the new head of the state-run company in the next few days and that Putin would make the choice.

"No doubt, the president's word will be decisive," Peskov said.

Transneft spokesman Sergei Grigoryev said he was unaware of any potential candidates.

Vainshtok asked Putin to accept his resignation because of his advanced age. Vainshtok turns 60, the official state retirement age, in October.

Kommersant reported Wednesday that Vainshtok had come into conflict with Kremlin deputy chief of staff Igor Sechin over access to export contracts for oil companies. Vainshtok also refused to employ Sechin's allies, Kommersant said.

Peskov and Grigoryev declined to comment on the allegations.

LUKoil president Vagit Alekperov expressed hope that Vainshtok's successor will be a "person who knows our industry and has worked there," Interfax reported.

Vainshtok took charge of Transneft in 1999 after serving as vice president of LUKoil from 1995.

Media reports have suggested a few potential successors to take over the company, including Zarubezhneft head Nikolai Tokarev, Gazprom deputy CEO Valery Golubev, and Industry and Energy Minister Viktor Khristenko.

The state controls 75 percent of Transneft, which constitutes 100 percent of voting shares. Private minority shareholders control the rest of the company by holding preferred shares.

The Federal Property Management Agency will nominate a new company president, while the Economic Development and Trade Ministry and the Industry and Energy Ministry have to give their stamp of approval. The prime minister will then endorse the candidate.

The process may be drawn out by changes to the Cabinet announced Wednesday.

Transneft's new head will have to handle current operations, including the construction of a giant oil pipeline from Siberia to the Pacific coast, as efficiently as Vainshtok, said Alfa Bank analyst Dmitry Lukashov.

But analysts were also looking forward to changes. Transneft should increase dividends on preferred shares and increase transparency, said Lukashov and Konstantin Cherepanov, an analyst at KIT Finance investment bank.

Transneft has been reluctant to discuss its activities with investors and provide management analysis of its performance, Cherepanov said.

Under its new chief, Transneft will also take over Transnefteprodukt, a state pipeline operator of refined products.

"I hope they do it in the most efficient way so as to achieve synergy," Cherepanov said.

The Cabinet on Wednesday submitted a bill to create a state corporation to organize preparations for the 2014 Winter Olympics. The corporation is set to begin work in January and will handle the expenditure of $7.3 billion on federal funds on roads, sports facilities and other infrastructure for the games.