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Home / Issue Archive / 2007 / June #6 / Deripaska’s Investment Group Seeks to Buy RussNeft

№ 6 (June 2007)

Deripaska’s Investment Group Seeks to Buy RussNeft

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Troubled Russian oil company RussNeft could soon be sold to Basic Element, an investment group owned by Russian billionaire Oleg Deripaska, as has been confirmed by both sides and the Federal Antimonopoly Service with paperwork for purchase approval already filed. 

The current owner of RussNeft Russian billionaire Mikhail Gutseriyev was charged with tax evasion and illegal business practices in May for acquiring Yukos assets before the company was declared bankrupt despite RussNeft’s official statements claiming it did not acquire any of Yukos’ assets directly. In addition to that, the Moscow Arbitration Court upheld Federal Tax Service’s charge of $145 million of back taxes against RussNeft. These are believed to be the main premises which propelled the ongoing negotiations between RussNeft and Basic Element about a potential sale.

According to the Financial Times, President of Russian BIN Bank and Oleg Deripaska’s business partner Mikhail Shishkanov stated the control over RussNeft had been handed to investment structures and added that “these investment structures have held negotiations about a sale of the company with a range of candidates; we will be glad if Basic Element acquires RussNeft.

Various media sources including Thomson Financial asserted last week the deal to buy RussNeft could be worth $6.5 billion, however this figure has not been confirmed.

RussNeft was established in 2002 and at present finds itself among the 12 leading Russian oil companies employing over 20,000 people. The company currently comprises 30 production assets, 2 refineries and a petrol station network operating in 22 Russian regions and CIS countries. RussNeft is developing over 170 oilfields with total oil reserves amounting to over 630 million tons. Annual production rose to 17 million tons of crude in 2004.

RussNeft stated it intends to boost its production capacity by 20-25 million tons annually. Back in 2006 the company entered foreign markets by joining a field development project in Azerbaijan.

Basic Element is a diversified holding company with assets both in Russia and abroad. The investment group’s core assets consolidate in 6 sectors: energy, machinery, resources, financial services, construction and development.

The consolidated revenue of the Group’s portfolio businesses exceeded $18 billion in 2006 and its combined asset value was more than $23 billion. The member companies are located in Russia, CIS, Europe, Africa, South America and Australia.

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