April 23, 2018 / 2:40 PM / in 3 months

Transneft says rejected Summa's proposal to complete port deal

MOSCOW (Reuters) - Russian oil pipeline monopoly Transneft has rejected a proposal from its rival Summa Group to complete a deal to buy a Novorossiysk Commercial Sea Port (NCSP) (NMTP.MM), a Transneft spokesman said on Monday.

If the deal goes ahead it will allow Transneft to take control of Russia’s largest port operator. But Transneft said earlier this month it had suspended talks on the deal after the authorities arrested the co-owner of Summa, Ziyavudin Magomedov, on charges of embezzling more than $35 million.

Magomedov denied the charges at a pre-trial hearing, where a judge ordered that he be held in custody until May 30.

“We believe it is inappropriate to complete the deal taking into account the circumstances in which Summa has found itself,” Transneft spokesman, Igor Dyomin told Reuters.

Transneft’s move to acquire control in NCSP by purchasing a stake from Summa was initially approved by Russia’s anti-monopoly regulator. The potential value of the deal has not been disclosed.

“Last week, a Summa representative has offered to complete the deal on NCSP,” Dyomin told Reuters. Dyomin also said that Summa had told Transneft that Russia’s largest oil producer Rosneft (ROSN.MM) had expressed an interest in Summa’s NCSP stake.

Rosneft denied this on Monday. “We have not and are not going to hold talks with individuals who are under investigation,” Rosneft said in a statement.

Summa declined to comment

NCSP controls Russia’s Novorossiysk port on the Black Sea, and the port at Primorsk on the Baltic. Both are major terminals for exports of oil and oil products to world markets.

Summa and Transneft jointly control Novoport Holding company, which owns 50.1 percent of NCSP. Transneft also has 10.5 percent in NCSP, while the Russian state property fund controls 20 percent.

Reporting by Vladimir Soldatkin. Editing by Jane Merriman

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