Everything depends on who actually becomes the new owner.
In 2002 the Gamburtsev Val oil area yielded only 236.3 thousand tonnes of oil, but Severnaya Neft plans to raise the output five-fold in 2003 and to reach a peak annual production of 6.11 million tonnes in 2006. Such volumes of production can be described as significant and it must not be forgotten that the winning of the Gamburtsev Val tender by Severnaya Neft in March 2001 was somewhat murky.
The controversy surrounding the firm has led to the resignation of the Minister of Natural Resources Boris Yatskevich and as a result the Ministry has taken the side of Severnaya Neft’s opponents and annulled the company’s licences. However, this did not automatically cause Severnaya Neft’s expulsion from Gamburtsev Val. The court battle is still in progress to this day and its outcome is far from being decided.
Severnaya Neft had managed to repel all the attacks on it until recently, when its position started to weaken. In late November last year the Moscow Court of arbitration upheld a lawsuit filed by the company Polarus, which has also showed interest in Gamburtsev Val, and announced the results of the ill-fated tender invalid. The next blow to Severnaya Neft was delivered by the deputy chairman of the Supreme Court of Arbitration Eduard Renov, who protested the decisions made in courts in Oryol and Arkhangelsk – they had announced Severnaya Neft’s tender victory lawful.
And finally, on December 28 the Sverdlovsk District Court in the city of Irkutsk upheld a suit by a shareholder from LUKoil and forbade Transneft from transporting the oil extracted in the Gamburtsev Val area. Severnaya Neft appealed the verdict but the court battle rumbles on. However, taking into consideration the latest developments, the David and Goliath battle between the Severnaya Neft and LUKoil could end in February if LUKoil decides to buy Severnaya Neft and succeeds.
The majority of oil industry experts are also inclined to believe that Vavilov will strike a deal with LUKoil. LUKoil’s board of directors has announced the increase of its oil supplies by 150 million tonnes a priority task for 2003 and it is generally considered that LUKoil views the Timan-Pechora basin, where Gamburtsev Val is located, as the region for expansion. After LUKoil absorbed KomiTEK and its daughter companies in 1999, spending $500 million in the process, Severnaya Neft became the largest individual player in the region.
However, the press secretary of Severnaya Neft, Yelena Prorokova, has told journalists that the rumours of the company being taken over by LUKoil were premature. LUKoil’s representatives, in turn, have said that any buyer of Severnaya Neft would not be recognized unless the agreements are reached on all the grey areas. These include not only the Gamburtsev Val tender but also LUKoil’s accusations that Severnaya Neft diluted its stock that belonged to Komineft by ten times – from 50 percent to the current 5 percent.
Other oil companies in the Nenetsk Region include France’s TotalFinaElf, which is developing the Kharyaginskoye oilfield together with Norway’s Norsk Hydro, and also the Tyumen Oil Company (TNK). But the French have plans to cooperate with LUKoil and TNK are unlikely to moot any new acquisitions after getting their gross share in Slavneft recently.
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