March 22, 2010
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Home / Issue Archive / 2010 / February #2 / LUKOIL Likely Buyer of ConocoPhillips Stake

№ 2 (February 2010)

LUKOIL Likely Buyer of ConocoPhillips Stake

LUKOIL Board Chairman Valery Graifer told journalists in Moscow today that if ConocoPhillips does decide to sell some of its shares in Lukoil as has been reported by Reuters, then LUKOIL should buy them. Answering a question on whether the company should make the purchase, Graifer said, “Of course”. He added that the issue still needs to be discussed by top executives in LUKOIL and noted that at the end of April 2010, LUKOIL’s foreign projects would be on the agenda of a planned meeting of the board of directors and this issue would also be covered.

By Alexandr Halayko

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LUKOIL Board Chairman Valery Graifer told journalists in Moscow today that if ConocoPhillips does decide to sell some of its shares in LUKOIL as has been reported by Reuters, then LUKOIL should buy them. Answering a question on whether the company should make the purchase, Graifer said, “Of course”. He added that the issue still needs to be discussed by top executives in LUKOIL and noted that at the end of April 2010, LUKOIL’s foreign projects would be on the agenda of a planned meeting of the board of directors and this issue would also be covered.

Yesterday, Reuters cited a source close to negotiations between ConocoPhillips and LUKOIL who said it appeared that the two companies had not been able to find common ground on a sale. This information was confirmed by Vedomosti, which reported that another source said that it was “90 percent likely” that LUKOIL would buy the shares if they were put up for sale.

However, yesterday LUKOIL President Vagit Alekperov told Reuters that LUKOIL did not intend to purchase the shares on the open market to support the company’s capitalization.

Bank Moskvy analyst Denis Borisov said that the sale of ConocPhillips’ stake would not affect either company to any great extent. “We do not see that LUKOIL received any special breakthrough technologies from Conoco and so the company will not really lose anything”. He added that if LUKOIL purchased the shares itself, it could then use them for other acquisitions.

Last October, ConocoPhillips announced it would sell some of its assets for $10 billion in order to cover part of its debt which had reached $30.3 billion in mid-2009. A company representative told Vedomosti that it would sell production, refining and sale assets, but did not specify anything specific. Western analysts immediately predicted Conoco would sell LUKOIL shares, but ConocoPhillips executives denied those suggestions.

 

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