Both Off- & Onshore

Yesterday he told reporters about the ambitious tasks which he set to his company. First of all, Mr.Gutseriev wants RussNeft to become an international company next year.  For that the businessman is looking to acquire assets in Kazakhstan, Azerbaijan, Algiers and Libya. Presently he carries on respective negotiations. He declined though to disclose any details of such future dealings. However encouraged by the progress of his holding company the head of RussNeft said that in future his company was going to produce 100 million tons both “offshore and onshore”. He made no forecasts though. So far neither company of Russia has ever flown up that high in its production process.
Mr.Gutseriev spoke yesterday about the structure of RussNeft proprietors. According to him, 70% of the company is owned by himself, the remaining stakes belong to his relatives. By the results of the year the company will produce about 16.5 million tons of crude. Next year it is going to reach a level of 25 million tons a year and earn $1 billion.
RussNeft continues to consider the possibility of conducting the IPO, though there is no final decision as to when this tool will be used. Mr.Gutseriev assures that such placement is not an end in itself, specific scope of the offering will depend on the market situation. RussNeft plans to change over to international accounting standards by the middle or end of next year. Answering the question of possible consolidation of the assets before the IPO and buy-out of minority shares in Saratovneftegaz and Orsk Refinery bought recently from TNK-BP, Mr.Gutseriev pointed out that he kept talking to minority shareholders and “much would depend on the price of the shares”. “Who said that the world is fair,” added he philosophically.
Upon becoming a holding company RussNeft started to restructure its assets. Specifically, not long ago they sold out their company Volganeft in the Samara region because it was located too far from the other entities of the RussNeft. Company Samara Nafta stood as a buyer in this deal, its general director being Semyon Kukes, who had headed Yukos some time ago. “It is the only asset I’ve sold,” informed Mr. Gutseriev pointing out that the volumes produced by Volganeft would be replaced by Udmurtgeologia whose annual oil output was 180 thousand tons of crude with RussNeft oil production in Udmurtia being 4 million tons a year.
One of the first foreign assets which the company is going to acquire may become 49% stake of Transpetrol possessing a portion of Druzhba oil pipeline crossing Slovakia. Currently the stake is owned by Yukos. The price of the stake, said Gutseriev, may be by several millions more than Yukos had paid for it, which was $74 million.
In the medium-term future RussNeft is looking to reequip the refineries, and in the long run to improve their oil refining from 60% to 80%. Moreover, in the coming three years the company is going to increase the number of own retail outlets in Moscow from 102 currently to 200 and thus take up 25% of the metropolitan market also buying new ground areas and making good use of the 35 ones the company came to possess upon acquisition of metropolitan retail networks Grand and Corus. And more to the point, yesterday the Natural Resources Management and Environmental Protection Department of Moscow’s government informed Interfax they had checked up some 200 gas-filling stations and brought 48 of them to administrative responsibility finding them inadequate as failing to meet the requirements of the pollution-free standards through the quality of their motor fuel. On the black-list compiled by the department appear most frequently retail outlets of Association Grand, EKA-AZS and ‘Magistral’ Management Company. But at RussNeft they still assure that their new gas-filling stations “will be better than all the other ones operating in the area”, although “slightly worse than those of BP”. “We are looking to take part in everything where we can invest money and get profit within 4 or 5 years. Moscow is the most lucrative region. And we are going to be the first in retail network,” assumes Mr.Gutseriev.
He also assures that he will never leave the company which he had managed to create. “We are not going to sell it out to anyone. We are for ages,” said he. “I know that I will do it, need only time and good health,” continued the businessman talking about his future plans. Going abroad or buying real estate there is not in the plans of Mr.Gutseriev either. He is going to be content with his flat, a house in Nakhabino and TU-134 to fly on.
Explaining his choice of business partner, Glencore International Trader, whose means has been extensively used to complete some of the deals and who has shares in several subsidiaries of RussNeft, Mr.Gutseriev pointed out that Glencore was “more flexible than other traders in terms of trustworthiness”, at this it had never occurred to Mr.Gutsereiv that he himself might not return the money to his partners”. By way of thanking Glencore Gutseriev promised to never switch over to another trader and “deliver crude to Glencore for 10-15 years and not only because it was his responsibility”.

Denis Rebrov