Sibneft still hot despite freeze

By Nic Hopkins

SIBNEFT, the Russian oil group controlled by Roman Abramovich, remains a takeover target of Western oil companies even after prosecutors in a Moscow court this week froze a large stake in the company held by its troubled rival Yukos.
Analysts said that freezing Yukos’s $6 billion (£3.2 billion) stake in Sibneft, a remnant of its failed attempt to merge and create the world’s fourth-largest oil producer, would not deter companies such as France’s Total and ENI of Italy from weighing potential alliances and mergers with Sibneft. “Sibneft’s owners have stated their long-term intention is to eventually merge or sell the business, and that does not seem to have changed in the past few days,” said Paul Collison, a senior analyst at UBS Brunswick in Moscow.

Sibneft is thought to have previously held talks to sell up to 50 per cent of the company to Total. Mr Collison said that a takeover or merger of Sibneft could occur within the next three years.

On Wednesday, Russian prosecutors froze Yukos’s stake with the threat of its confiscation from the oil giant, which is facing tax bills of almost $18 billion (£9.7 billion). The 34.5 per cent stake could be confiscated if it is proved that Yukos acquired it with illegal funds.

The proposed merger between Sibneft and Yukos unravelled after Mikhail Khodorkovsky, the Yukos chief, was arrested last October. Mr Khodorkovsky, who is being held in isolation at a Moscow prison, is on trial for charges of tax evasion and fraud.

The battle between the Government and Yukos is perceived as an attempt to thwart Mr Khodorkovsky’s political ambitions, rather than as a simple case of tax evasion.

(From Times online, 12.11.2004)