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27

LUKoil buys out partners in three ventures

Russia's leading oil producer LUKoil has bought out foreign investors in three oil-producing joint ventures in northwestern Russia in the past few weeks. Taken together, the deals are worth about $168.

Russia's leading oil producer LUKoil has bought out foreign investors in three oil-producing joint ventures in northwestern Russia in the past few weeks.
Taken together, the deals are worth about $168.5 million and add 3 million tons annually to the company's production and 80 million tons to reserves. Observers interpret them as an effort by the Russian giant to press foreign investors into leaving its jointly owned or operated Russian assets.
"None of the foreign investors is willing to invest enough to raise production," said Konstantin Reznikov, oil analyst at Alfa Equities in Moscow. "LUKoil won't invest to raise output if it has to share the profits. So these deals are beneficial for all sides."
Earlier this week, LUKoil subsidiary LUKoil-Perm agreed to pay $38.5 million to Aminex for its 55% stake in AmKomi. The main shareholders of Aminex, a Cyprus-based company trading on the Dublin and London exchanges, are the International Finance Corp., Credit Suisse First Boston and the Bank of England's pension fund. Before the deal, LUKoil held a 10% stake in AmKomi through Komineft, another Komi-region oil venture in Russia's northern Komi region, in which LUKoil has built up a 75% stake since 1998.
The new deal gives LUKoil 65% of AmKomi; the balance of the shares is owned by the state property fund of the region.
Last week, Soco International plc, a U.K.-based oil and gas exploration and production company, agreed to sell its half-share in the Urals oil producing venture, Permtex, to another LUKoil subsidiary. The price was $50 million.
LUKoil announced a deal July 17 with Bitech Petroleum Corp., of Montreal, to buy its production venture in the Komi region, plus exploration rights that Bitech holds in Egypt, Tunisia, Morocco and Colombia.
The offer, which Bitech accepted, was worth C$123 million ($80 million). The IFC is also a major shareholder in Bitech.
A year ago, Bitech executives fought off a raid on their Russian oilfield operations by a former Russian partner. Subsequently, a senior Bitech executive said in an interview that the company would have to build a partnership with a Russian oil major, if it had any chance to survive. Jim Henderson, head of research at Renaissance Capital in Moscow, noted that LUKoil's buyout offer represented a 99% premium over Bitech's share price.
Canadian government officials, who had supported the company in discussions with the Kremlin during the earlier raid, endorsed the terms of the sale as fair and reasonable.
Neftegaz.ru