In an attempt to create a state energy leviathan, Russia's natural gas monopoly Gazprom said on Tuesday that it would bid for the prize oil assets of the crumbling oil giant Yukos, the country's No. 1 oil producer, at an auction this month.
Gazprom ended weeks of speculation when a top official told an energy conference assembled at the company's headquarters on Tuesday that the company wanted to bid in the Dec. 19 auction for Yuganskneftegas, the leading producer among Yukos subsidiaries. The operation pumps about 1 million barrels of oil a day, or 60 percent of Yukos' supply.
If Gazprom wins the auction -- and as the Kremlin-favored company, that is widely expected -- it would immediately join the ranks of the world's top five energy companies in oil and natural gas reserves.
"Gazprom should have two equal businesses," said Sergei Bogdanchikov, referring to gas and oil. Bogdanchikov is head of Gazprom's newly founded oil arm, Gazpromneft, which is expected to merge with the state-friendly oil concern Rosneft.
The Russian government owns 51 percent of Gazprom.
"We must have a world-class company" similar to Exxon Mobil, BP or Royal Dutch/Shell, Bogdanchikov said, adding, "Yugansk is the most attractive asset."
The board of directors of Gaz-prom will vote on whether to take part in the auction in the coming days.
"We hope we will be able to win the contest," he said.
Yukos, the nation's largest private oil company, is burdened by more than US$20 billion in back tax claims, part of what political analysts say is a Kremlin-inspired campaign to strip the company away from its founder, Mikhail Khodorkovsky.
Once Russia's wealthiest person, Khodorkovsky has been in jail for more than a year as he is tried on criminal charges.
The Dec. 19 auction of Yuganskneftegas was intended to help pay off a portion of Yukos' back taxes, but the Russian Federal Property Committee set a low starting price of US$8.65 billion, roughly half what analysts say the unit is worth. It is unclear whether Yukos' other assets will also be auctioned to cover the remainder of the tax bills.
For Gazprom shareholders, "the real concern here is whether buying Yuganskneftegas is accretive to earnings," said Adam Landes, an oil analyst at Renaissance Capital.
As Gazprom emerges as the government's favored vehicle for consolidating strategic natural resources, "that defers long-sought reforms of Russia's domestic gas market," he said.
"It's terrible news for shareholders in Gazprom," he said.
Domestic prices for natural gas are set far lower than gas for export. The disparity is popular with Russian consumers, but it holds down Gazprom's earnings.
By acquiring Yuganskneftegas, not only would Gazprom become one of the world's biggest energy firms, it would also put the Kremlin firmly in control of almost 20 percent ofRussia's oil production.
Gazpromneft will combine Gazprom's annual output of some 9.9 million tonnes of gas condensate with Rosneft's more than 18 million tonnes of crude oil, or about 400,000 barrels a day. With Yuganskneftegas, Gazprom would become a top Russian oil producer alongside Lukoil. Gazprom's oil output could double to as much as 81.6 million tonnes, or 1.8 million barrels a day, next year if it buys Yuganskneftegas, and as much as 113 million tonnes a year by 2010, Bogdanchikov estimated.
Credit rating and aid agencies have warned Russia that despite high world oil prices, dynamic domestic consumer demand and tight budgetary policies, Russia's strong economic growth could be hurt if the state tightens control over industries like energy.
Standard & Poor's added that the benefits of Gazprom's bid for Yukos assets "would depend on the extent of any bargain price Gazprom might pay, counterbalanced against its use of debt to finance the purchase and risk of future liabilities for past taxes or to parties, such as Yukos shareholders, who might challenge the fairness of the transaction."
Moreover, S&P said it might cut its rating on Gazprom if the company "were pressured by the government to implement large-scale, politically motivated, risky and uneconomical investments."
The government is aiming to recruit 1,096 foreign English teachers and teaching assistants this year, the Ministry of Education said yesterday. The foreign teachers would work closely with elementary and junior-high instructors to create and teach courses, ministry official Tsai Yi-ching (蔡宜靜) said. Together, they would create an immersive language environment, helping to motivate students while enhancing the skills of local teachers, she said. The ministry has since 2021 been recruiting foreign teachers through the Taiwan Foreign English Teacher Program, which offers placement, salary, housing and other benefits to eligible foreign teachers. Two centers serving northern and southern Taiwan assist in recruiting and training
WIDE NET: Health officials said they are considering all possibilities, such as bongkrekic acid, while the city mayor said they have not ruled out the possibility of a malicious act of poisoning Two people who dined at a restaurant in Taipei’s Far Eastern Department Store Xinyi A13 last week have died, while four are in intensive care, the Taipei Department of Health said yesterday. All of the outlets of Malaysian vegetarian restaurant franchise Polam Kopitiam have been ordered to close pending an investigation after 11 people became ill due to suspected food poisoning, city officials told a news conference in Taipei. The first fatality, a 39-year-old man who ate at the restaurant on Friday last week, died of kidney failure two days later at the city’s Mackay Memorial Hospital. A 66-year-old man who dined
EYE ON STRAIT: The US spending bill ‘doubles security cooperation funding for Taiwan,’ while also seeking to counter the influence of China US President Joe Biden on Saturday signed into law a US$1.2 trillion spending package that includes US$300 million in foreign military financing to Taiwan, as well as funding for Taipei-Washington cooperative projects. The US Congress early on Saturday overwhelmingly passed the Further Consolidated Appropriations Act 2024 to avoid a partial shutdown and fund the government through September for a fiscal year that began six months ago. Under the package, the Defense Appropriations Act would provide a US$27 billion increase from the previous fiscal year to fund “critical national defense efforts, including countering the PRC [People’s Republic of China],” according to a summary
‘CARRIER KILLERS’: The Tuo Chiang-class corvettes’ stealth capability means they have a radar cross-section as small as the size of a fishing boat, an analyst said President Tsai Ing-wen (蔡英文) yesterday presided over a ceremony at Yilan County’s Suao Harbor (蘇澳港), where the navy took delivery of two indigenous Tuo Chiang-class corvettes. The corvettes, An Chiang (安江) and Wan Chiang (萬江), along with the introduction of the coast guard’s third and fourth 4,000-tonne cutters earlier this month, are a testament to Taiwan’s shipbuilding capability and signify the nation’s resolve to defend democracy and freedom, Tsai said. The vessels are also the last two of six Tuo Chiang-class corvettes ordered from Lungteh Shipbuilding Co (龍德造船) by the navy, Tsai said. The first Tuo Chiang-class vessel delivered was Ta Chiang (塔江)