RussNeft to Have Entered Vneshtorgbank.

Yesterday RussNeft and Vneshtorgbank (VTB) announced of signing a cooperation agreement. Specifically, the document stipulates for crediting the oil company to back its current activity. The marketers assume though that in itself the agreement with VTB is extremely important for the company as it makes it financially independent of Glencore, an international oil trader that has been financing its expansion until recently. Mikhail Gutseriev’s company may resort to the services of the state bank in the nearest future. Experts are of the opinion that RussNeft may need borrowed funds to enable purchase of TNK-BP assets.
NK Russneft OAO got its registration on the 27th December 2002. Its initial capital was made up by oil producer Varieganneft with total reserves of about 100 million tons and annual output of 1.6 million tons, and branch connections of its chief Mikhail Gutseriev developed in 2001-2002 when he was in charge of Slavneft. Currently RussNeft is placed among the ten first-rate Russia’s oil and gas companies. It structures more than twenty producing, refining and transport entities, as well as a retail network of petrol stations in Moscow and Moscow region. Total recoverable reserves of Russneft exceed 600 million tons. By now the company produces 15 million tons.
Until recent times it posed a mystery where Russneft was taking the money for the large-scale growth. As estimated by experts, in 2004 alone the company spent in no way less than 1 billion dollars for new acquisitions. The company was reported to have taken a loan of $228 million in 2003 from a Cyprus company called Intersil Ltd. According to the accounts of the company it also received credits from BIN Bank, Eurobank, and Eurofinance Bank. Nevertheless it was obviously not the only source of financial intake for RussNeft. New facts came up this August. It became known that Swiss trader Glencore, taking up the bulk of RussNeft’s hydrocarbons, bought 49% stake of several main affiliates of Gutseriev’s company; they are Varieganneft, Ulyanovskneft and JV Nafta-Ulyanovsk. According to the information of RBC Daily, that was how the Swiss company used the right to redeem asset shares of its strategic partner. This right had been given to Glencore in exchange for the money lent to RussNeft to finance its establishment and credit its deals.
Henceforth Gutseriev’s oil company can boast of its independence of its foreign partner. Yesterday Russneft signed a cooperation agreement with Vneshtorgbank. According to the joint statement, the document specifies packaged bank services for RussNeft; formation of short-term credits to back its current activities and financial provision of import operations related to purchase of equipment. Neither VTB nor Russneft has said more about the agreement.

Experts point out that in itself the agreement is important for the oil company. “First of all, its mere existence shows that the Company has got access to the same quality resources that can be given to Gasprom or, say, to Rosneft. Secondly, financial support from a state bank makes the company independent of Glencore financing,” - they explain. Such agreements testify to the fact that a concluding company has reached a qualitatively new level in its development with regard to its financial performance, agrees general director of Russian Economic Society, Denis Mukhanov. “As for Russneft, such agreement has become possible not because of its size, as the company is far from being one of the biggest in oil industry, it’s rather the current progress” - he said to RBC Daily.

The marketers do not exclude that with VTB’s money Russneft may continue to buy out assets of small producers. “The agreement with VTB suggests that Russneft should be getting ready for new mergers in the nearest future, - RBC Daily was told by Dmitry Manguilev, an analyst of investment company Prospect, - The deals  might be maturing and the company urgently needs borrowings, or they may be only schemed therefore it makes no sense asking for money abroad. Most likely the oil company is going to continue its expansion through buying small assets. It is not improbable that it will be after some assets of TNK-BP”. This is to remind that TNK-BP is considering the option of selling Saratovneftegaz, Nefteorgsynthes, and Orenburgnefteproduct, as well as Udmurtneft.

Companies Department
Dmitry Koptyubenko