Rosneft Backed Up Baikal Finance Group at Yuganskneftegaz Auction, the Annual Report Says
The state-run Rosneft had been funding Baikal Finance Group (BFG) on the eve of Yuganskneftegaz auction held on December 19, 2004, at least the annual report unveiled by Rosneft yesterday allows to draw up exactly this conclusion. It was Rosneft that helped BFG settle the duty of 49.35 billion rubles required to bid at the auction, meaning that BFG was, after all, a shell company, all statements of Vladimir Putin about its individual roots notwithstanding.
In two days after Yuganskneftegaz disposal, President Putin announced he knew who had founded BFG. “That company has only individuals as its holders, involved in the power business for years,” Putin said past December 21. “As far as I know, they intend to build up relations with other power companies of Russia, which are interested in the asset. As to the chances of a state-run company to acquire such asset, it may, of course, do it, like other market players.”
However, the 2004 report of Rosneft that was promulgated yesterday but sealed by the sole holder of the state-run oil company as far back as on June 24, 2005, signals that exactly Rosneft had backed up BFG.
The report says Rosneft provided security under a year loans granted by Sberbank to certain Malena, Florensan and Kamelia for a total worth of 34 billion rubles, having released promissory notes exactly for that purpose. As to Rosneft itself, it also raised 16 billion rubles with Sberbank for a year.
Rosneft declined to comment yesterday, but it seems the whole amount of 50 billion rubles went to enable BFG to bid in the auction, as the latter required the deposit of 49.35 billion rubles. Therefore, BFG was clearly bidding on behalf of Rosneft.
Rosneft announced BFG’s buy-out on December 22, in three days after the victory of that known-only-to Putin company that was able to easily offer 260.753 billion rubles ($9.35 billion) vs. the starting price of 246.75 billion rubles. BFG paid in full for Yuganskneftegaz on December 31, 2005, having raised the amount with Rosneft through the interest-free loans. As to Rosneft, it got the best portion of the funds from its subsidiaries – Purneftegaz, Sakhalinmorneftegaz, Stavropolneftegaz, Krasnodarneftegaz and Severnaya Neft, according to the annual report of the company. Overall, Rosneft subsidiaries provided $6.7 billon to the parent company; they had generated $5.3 billion of that amount by selling promissory notes to some Trade Express.
No one in Rosneft or in the government of Russia is particularly eager to specify on whose behalf that Trade Express had been acting and from where it had derived the said $5.3 billion. The market players, however, are sure that Rosneft subsidiaries sold their notes to the state-run Vneshekonombank, which, in its turn, had used Stabilization Fund’s money to the effect.
The remarkable facts are that the holders of Rosneft subsidiaries had never sanctioned the above deals with the head company and that the loans themselves have been paid back to-date thanks to $6 billion received by Rosneft from Chinese companies as advance payment for oil deliveries.
And last but not least, all actions of Rosneft and of its subsidiaries, including the security granted to Malena, Florensan and Kamelia and the sale of promissory notes to Trade Express, were clearly legal, though the subsidiaries may face certain penalty for making big deals with no holders’ authorization, but the fines, if any, will be negligeable - all money has been paid up in part and in whole to-date.
www.kommersant.com
All the Article in Russian as of Aug. 26, 2005
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