July 24, 2007 / 11:16 AM / 12 years ago

Russneft owner to sell embattled firm: sources

MOSCOW (Reuters) - The owner of Russian oil firm Russneft, billionaire Mikhail Gutseriyev, will cede control in his company to a Kremlin-friendly firm after months of state pressure, sources close to talks said on Tuesday.

Gutseriyev, whose personal fortune is valued at $3 billion by U.S. magazine Forbes, will also step down as Russneft’s president following a string of back tax claims brought by state officials.

“I think the company will have another president within a week,” one source told Reuters.

Daily business newspaper Vedomosti said that Gutseriyev would sell the company to Russia’s second richest man, Oleg Deripaska, a close ally of President Vladimir Putin, for around $6.5 billion - a deal that analysts said would appear very generous.

But Russneft spokesman Eduard Sarkisov denied Gutseriyev would quit or sell the firm. In a subsequent statement, Russneft called reports of an impending sale a “provocation”.

“Russneft states officially that it has held no talks about a sale and will not hold any. Russneft is not for sale,” it said. Interfax news agency quoted Gutseriyev as saying he valued Russneft at $8-$9 billion.

A second industry source told Reuters that state-controlled oil giant Rosneft (ROSN.MM) was also looking at Russneft, which produces 300,000 barrels of oil per day, has two refineries and recoverable oil reserves of around 4.6 billion barrels.

“I can’t imagine why this asset should escape from Rosneft’s control. Rosneft has amassed all important assets in Russia over the past years,” one of the sources said. Deripaska’s investment vehicle Basic Element denied it was in talks to buy Russneft.

Analysts said Russneft was poised to end up under state control.

“Russia may be one step closer to boosting state control over oil production to above 50 percent,” said Oleg Maximov from Troika Dialog brokerage.

TAX CLAIMS

Tax officials have brought a string of tax claims against Gutseriyev, threatening to nationalize Russneft’s shares. On Monday Moscow’s Arbitration Court upheld a first $134 million tax evasion claim against Russneft.

Gutseriyev is himself charged with “illegal activities committed by an organized group on a grand scale”.

Russian media said Gutseriyev had fallen out of Kremlin favor by buying assets from rival oil company YUKOS YUKO.RTS before its bankruptcy last year.

“I think Gutseriyev didn’t learn any lessons from the YUKOS affair,” said Ivan Mazalov, who helps manage $4.5 billion worth of assets at Prosperity Capital Management.

YUKOS, once Russia’s largest oil producer, was brought to its knees by a $30 billion back-tax claim. Its founder Mikhail Khodorkovsky called it politically motivated, as he accused the Kremlin of seeking to punish him for his political activities.

Khodorkovsky is now serving an eight-year prison term in Siberia for tax evasion and fraud, while the assets of YUKOS are now almost fully controlled by Rosneft.

Russneft was set up five years ago from scratch when Gutseriyev, formerly the head of state-controlled oil firm Slavneft, bought some Slavneft assets at knock-down prices soon after its privatization.

Gutseriyev has denied any wrongdoing in those transactions, some of which were conducted with the financial help of Swiss-based oil trader Glencore. Russneft’s debt, including to Glencore, amounts to $2.8 billion.

Analysts from UBS said in a note they would consider a price of $6.5 billion for Russneft as “very generous” as it would imply a valuation of $86 per barrel of production should the new owner assume debts compared with Russia’s average of $80.

Glencore is also a partner of Deripaska in UC RUSAL, Russia’s largest aluminum producer, formed via the merger of aluminum assets of Deripaska, Glencore and SUAL, a firm controlled by metals magnate Viktor Vekselberg.

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