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AI-92 42.19

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The sale of LUKOIL is postponed

Recently the government got used to solving financial problems of Russia by selling the shares of the large enterprises. Now it plans on selling LUKOIL, which for today is the largest Russian petroleum company conducting business in 40 Russian regions and in 25 countries of the world.

Recently the government got used to solving financial problems of Russia by selling the shares of the large enterprises. Now it plans on selling LUKOIL, which for today is the largest Russian petroleum company conducting business in 40 Russian regions and in 25 countries of the world. LUKOIL?s share is 24 % of the Russian petroleum production and 18 % of processing. Since February 2001 LUKOIL removed 183 enterprises from its structure, they were either sold, liquidated, or reorganized. At this stage LUKOIL?s board of directors works out the program of restructuring for 2003-2004.

The sale of "LUKOIL" shares could solve the following political problems:
? energy component of the country budget for 2003
? contribution to repayment of the external debt in 2003 (Russia has to pay 17 billion next year)

Demand for "LUKOIL" shares exceeds the offer, but at this point the price does not suit the government (on the London stock exchange the package of 5,9 % of "LUKOIL" shares cost ed $700 million in summer). Officials decided to wait for a better situation on international markets and more favorable sale conditions in the near future.

Experts see the decision of the Government in different ways. Some consider that it?s the right decision and predict market growth from the middle of the next year. Others worry, that, having postponed privatization of "LUKOIL", the government will not receive even $800 million (the current price of a package). It?s impossible to predict, for example, how the situation with Iraq will result. Analytics warn: if the prices for petroleum fall, "LUKOJL" will not be sold in 2003.

All doubts disappeared after Prime Minister Michael Kasianov has signed the order to sale almost 75 % of "Slavneft" shares which should give the state about $2 billion. As officials expect, this can provide for the budget needs.

Author: Nana Bendukidze

Source : Neftegaz.ru