Reuters
Yugansk Sale May Delay Gazprom Plans
Friday December 24, 6:20 pm ET
By Richard Ayton
MOSCOW (Reuters) - The nationalization of Russian oil major YUKOS's main unit has cast doubt over the timing of plans to create a huge state energy holding and liberalize trade in the shares of gas monopoly Gazprom, analysts said on Friday.
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Gazprom said on Thursday that it was still on course to merge with state oil firm Rosneft, which has bought YUKOS's Yugansk unit, despite the prospect of international legal action by YUKOS shareholders.
Gazprom said the takeover would be completed by January.
Energy Minister Viktor Khristenko also said on Friday that the Gazprom-Rosneft merger was on course, although he acknowledged issues need to be resolved.
"No changes to the merger process have taken place. The process is under way, but it is legally complex, and the legal and financial aspects of the transaction need to be reconciled," he said.
Analysts said the merger is likely to be delayed by a need to reassess Rosneft's valuation after it purchased Yugansk, which potentially transforms a mid-tier company into an oil major with output almost equal to OPEC member Libya.
"The statement on concluding the deal by January is very ambitious taking into account the Yugansk buy," BrokerCreditService analyst Mark Shein said. "The terms of the deal will have to be reviewed."
Under a plan announced in September, Gazprom would consolidate Rosneft and perhaps other state firms in order for the government to raise its direct holding to more than 50 percent from 39 now.
The state wants a controlling stake in Gazprom before it opens trade in the company's ordinary shares to eager foreigner investors -- a move likely turn the world's largest gas firm into an emerging market blue-chip stock.
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Rosneft was valued at $7.0 billion to $8.5 billion before it bought Yugansk, according to a study by investment bank Morgan Stanley that was ordered by the government. At that price, merging Rosneft into Gazprom would give the state the additional 10.7 percent of the gas giant it needs for official control.
However, a Dresdner valuation on behalf of Gazprom valued Rosneft at $5.5 billion to $6.0 billion.
"As Yugansk is burdened with tax liabilities, we estimate that Rosneft (post-Yugansk acquisition) stands at 11.7 percent of Gazprom's current market capitalization -- just enough to cover the 10.7 percent required for the state," said brokerage Nikoil.
Russia claims Yugansk, which it auctioned on Sunday for $9.4 billion to pay YUKOS's huge back tax claims, owes around $5 billion in back taxes.
The dismemberment of Russia's biggest oil exporter is widely seen as Kremlin punishment for YUKOS's politically ambitious main owner Mikhail Khodorkovsky, who is on trial for tax evasion and fraud.
Another potential delay to the Rosneft merger is a U.S. legal case that could ensnare Gazprom if the company does not move cautiously, according to analysts.
YUKOS filed for U.S. bankruptcy protection last week and has threatened to challenge the Yugansk sale and seek court orders targeting Gazprom's crude and gas exports with seizure.
It is not yet clear whether the Houston court will accept jurisdiction over YUKOS or whether it will apply sanctions to Rosneft and Gazprom, which were originally scheduled to merge by the end of 2004.
"It had already become obvious that the deadline (to merge by the end of 2004) was not realistic, particularly in the aftermath of the chaos surrounding the Yugansk auction," Adam Landes, analyst at Renaissance Capital, wrote.
"We are still somewhat concerned that the deal could face further delay or even, maybe, outright cancellation if external legal pressure on Gazprom mounts."
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