RussNeft Ranks Among Oil Refiners

Yesterday RussNeft announced that it had bought a number of TNK-BP assets at Saratovneftegaz, Orsknefteorgsintez (Orsk Refinery), Orenburgnefteprodukt and Neftemaslozavod. Moreover, RussNeft has agreed with the owners of 75% stake at ‘Krasnodar Oil Refinery – Krasnodarekoneft’ ZAO on the purchase of these assets. The total capacity of the refineries bought by RussNeft comes to 9.9 million tons of crude oil a year. Thus, within three years former president of Slavneft Mikhail Gutseriev has managed to create a full-value vertically integrated oil company.
Yesterday TNK-BP and RussNeft announced they had completed the sale by TNK-BP of assets at Saratovneftegaz OAO, Orsknefteorgsintez OAO, Orenburgnefteprodukt OAO and Neftemaslozavod OAO to RussNeft. Renaissance Capital acted as a financial adviser on the deal. The companies informed that respective authorization of the deal had been obtained from appropriate state bodies. With effect from today RussNeft is assuming responsibility and operational control of the companies. According to the information of Kommersantъ, the total amount of the deal is some $1 billion, where half of the amount is to be paid for Saratovneftegaz. For the purchase the company didn’t use the means of the bond issue floated a day or two ago. The purchase was financed using its own and other borrowed funds. Traditionally in such deals RussNeft works in partnership with international company Glencore.
At the same time RussNeft has come to an agreement in principle with the shareholders of ‘Krasnodar Oil Refinery – Krasnodarekoneft’ ZAO possessing 75% stake of this share holding. Mikhail Gutseriev’s company will assume operational control of the refinery with effect from January 2006. In both communications on the purchases it is pointed out that the acquisition of the oil refining assets allows the company to complete the circuit of the vertical integration of the holding.
Daily oil production at Saratovneftegaz OAO is 42,000 barrels, or nearly 2.1 million tons of crude a year; its proved and prospective oil reserves come to 163 million barrels. The capacity of Orsknefteorgsintez OAO (Orsk Refinery) amounts to 6.7 million tons of crude oil a year. The template capacity of Neftemaslozavod OAO is 100,000 tons. At Orenburgnefteprodukt OAO there are 101 gas-filling stations and 37 tank farms. The capacity of the Krasnodar Refinery comes to 3.1 million tons of crude a year. So far the refinery has been owned by some offshore companies registered at British Virgin Islands. Currently in the structure of RussNeft there are 30 producing entities, 2 refineries, 2 transport companies and 300 petrol stations. Some time ago the company informed that its annual oil output came to 17 million tons of crude. Notwithstanding the fact that after acquisition of Saratovneftegaz the oil output will be even higher, the company will not have to go to other refineries for processing, for instance, the Syzran Refinery possessed by Yukos. Commonly refining capacities of big vertically integrated oil companies consume half of their oil production volumes. In this way Mikhail Gutseriev has been able to crack the main problem of RussNeft established by him in 2002 which was absence of own refining.

Anna Ъ-Skornyakova