Convinced: why “Bashneft” has given “Rosneft”

Convinced: why “Bashneft” has given “Rosneft”


Photo: Andrey Rudakov/Bloomberg

Prime Minister Dmitry Medvedev has put an end in disputes on privatization of state-owned Bashneft: it is ordered that this package is bought, another state company — “Rosneft” — for 329,7 billion rubles. having Concluded this transaction, “Rosneft” consolidates about 40% of Russian production

Purchase “at any time”

Prime Minister of Russia Dmitry Medvedev on Monday, 10 October, signed a decree on the sale of 50.08% of shares of “Bashneft”. “This sale is in the address of public joint stock company “Oil company “Rosneft” at the price of 329,69 billion rubles”, — said he at the meeting with Deputy Prime Ministers.

According to Medvedev, the payment of the government’s stake in Bashneft must be received before Friday, October 14, these revenues are already included in the budget for the year 2016. “We have recently discussed measures to consolidate the budget by raising more revenue — including in the framework of this work decided to sell a controlling stake in the joint-stock company “Bashneft”, — said the Prime Minister.

CEO of “Rosneft” Igor Sechin told journalists that the documents for the purchase of “Bashneft” can be signed “at any time” (quoted by TASS). The Board of Directors of “Rosneft” on Saturday, October 1, approved the company’s participation in this transaction, at the same time Sechin was requested until October 15 to sign a contract of sale in the amount of not more than 330 billion rubles.

Rosneft “the unique experience of integrating acquisitions,” said “Interfax” the press-Secretary Mikhail Leontyev. In comparison with TNK-BP, which Rosneft acquired in 2013, “Bashneft” — a “small asset”, and before that (up to the purchase of TNK-BP) Rosneft had many other transactions, he recalled. Leontyev also said that the purchase of the state stake in Bashneft to Rosneft will not need additional loans. In the first half of the year in the accounts of the company were over $22 billion, about $3 billion it received from the sale of Indian investors minority stakes in subsidiaries.

The final amount stated in the decree Medvedev (329,69 billion rubles, or $5,29 billion), 4.7% above the upper bound estimates of the government’s stake in Bashneft, which by order of the government in the summer prepared the E&Y — 297-315 billion rubles on Monday this package on the Moscow exchange was worth 280,2 billion.

Such a high rating was the reason for the direct sale of “Bashneft”, without bidding: on the eve of the Minister of economic development Alexei Ulyukayev saidthat to buy it submitted only two binding bids and Rosneft is positioned as a priority buyer because it offered more than indicated in the assessment of E&Y. the name of the second applicant, who offered less, the Minister did not name, noting only that it was not LUKOIL.

The representative of “VTB Capital”, the government’s adviser on the deal, declined to comment.

40% of “Rosneft”

The government planned to sell a controlling stake in Bashneft in September—October of 2016. Non-binding application for participation in privatization brought nearly a dozen companies — in addition to “Rosneft” LUKOIL and Independent oil and gas company controlled by the former President “Rosneft” Edward Khudainatov, Fund Energy former energy Minister Igor Yusufov, the Russian direct investment Fund (RDIF), “Tatneft” and others.

The main dispute arose over the right to Rosneft to bid against the government and even the President’s administration. “It’s kind of stupid to “Rosneft” were: one public, the company participated in the privatization of other”, — told reporters presidential aide, Chairman of the Board of Directors of “Rosneft” Andrei Belousov. In mid-August, Medvedev has postponed privatization indefinitely.

But in early September, Russian President Vladimir Putin in an interview with Bloomberg called the purchase “Bashneft”, “Rosneft” “is not the best option,” but said that ultimately, “to budget is important, who will give more money in trades”. A month later the government resumed the privatization of the company, then first Deputy Prime Minister Igor Shuvalov said that “Rosneft” will apply. After that, the other contenders began to drop out of the fight. Vagit Alekperov, President of LUKOIL, who was considered the main contender for “Bashneft”, to statements Shuvalov expressed doubts that the company will be privatized this year, and after the resumption of the privatization of the company representatives refused to comment. The Fund Energy said that “Rosneft” has agreed to pay more than $5 billion for the state, sent a “most attractive proposal”. And RDIF with international partners decided to withdraw, because the amount requested for the package of shares of “Bashneft” significantly higher than original estimates, said the head of the Fund Kirill Dmitriev.

In a letter to Sechin in the government explained the necessity of selling state-owned stake of “Bashneft” exactly “Rosneft”, because it will allow more profitable to privatize 19.5% of Rosneft (also scheduled before the end of the year) and will bring the company’s 160 billion rubles synergy. This assessment was confirmed by analysts “Atona”. If the buyer was LUKOIL, the synergy would have amounted to only $1.9 billion (118.4 billion USD), they calculated. “The best scenario that we considered, materialized. We are particularly glad that the government decision on Bashneft dictated by economic and not political reasons,” — they point.

According to the calculations of Raiffeisenbank, after the purchase of Bashneft reserves of “Rosneft” will increase by 5.34%, to 45.3 billion barrels. BC, and its daily production by 7.14%, to 5.7 million barrels. a day. As a result, its market share of oil production of Russia will grow from 38 to 42%, in the market of processing from 30 to 36.8% (the basis is the data for 2015). According to estimates by Bank of America Merrill Lynch, “Rosneft” will control 39% of the Russian extraction and 36% of processing. Rosneft had not yet applied to the Federal Antimonopoly service (FAS) the petition for the deal, said RBC representative of the FAS. He did not specify whether the service plans to introduce any restrictions in relation to the company.

At the end of trading on Monday, shares of “Rosneft” on the Moscow stock exchange rose by 5.7%, the capitalization amounted to 3.8 trillion roubles (LUKOIL shares increased by only 0.9% to 2.6 trillion rubles). In addition to Bashneft, the government has confirmed plans to privatize 19.5% of Rosneft’s intention to sell its third-party investor, not the company itself, says a senior analyst пRaiffeisenbank Andrey Polishchuk. Besides, on Monday the price of Brent crude jumped 2.4% to $53.2 per barrel.