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Russia Oil and Gas Competitive Intelligence Report 2010 indebted Deripaska was thrown a lifeline by state-owned Sberbank, which agreed to restructure one of Russneft’s loans. © Business Monitor International Ltd Page 55
Russia Oil and Gas Competitive Intelligence Report 2010 Surgutneftegaz – Summary Surgutneftegaz is the fourth largest crude producer in Russia. Its traditional base is southern West Siberia but it has been expanding into Timan-Pechora and Khanty-Mansyisk in the north and views Eastern Siberia as another growth region. Crude production averaged 1.2mn b/d in 2009; gas output totalled around 14.1bcm. The company’s downstream assets include the 398,000b/d Kirishi Oil Refinery (KINEF) in the Leningrad region. Retail assets include a network of around 300 service stations in Northwestern Russia. Sales in 2008 amounted to RUB547bn. Its reporting of profits, however, is somewhat erratic, as it does not follow international accounting standards. In March 2009, Surgutneftegaz made its first foray into international markets, paying US$1.4bn for a 21.2% stake in Hungarian oil and gas company MOL, to the chagrin of the Hungarian government. Surgutneftegaz is an opaque company. It moved 42% of its shares to a separate company in 2003 and since then has not revealed the ownership of that stake, instead classing the stock as treasury shares. According to a statement by Russian strategist Stanislav Belkovsky to German newspaper Die Welt in 2007, Prime Minister Vladimir Putin himself owns 37% of Surgutneftegaz. Sistema – Summary Telecom-focused Russian conglomerate Sistema made a big entrance into the oil industry in April 2009, acquiring six major upstream and downstream businesses in the Republic of Bashkortostan (Bashkiria) in the Urals region. The deal gave Sistema a 76.5% stake in Bashneft, the regional quasi-monopoly, plus five affiliated refining and marketing concerns. In early-2010, Sistema reached a preliminary agreement to acquire 49 % of Russneft. The Russneft stake will allow Sistema to balance out its downstream-heavy portfolio, helping it to fill its refineries. Further upstream growth is expected to come from the once-sleepy Bashneft, with Sistema targeting 7.8% crude output growth in Bashkiria in 2010. Given Sistema's growth ambitions, further acquisition of oil assets in Russia and the former Soviet Union is to be expected in the near future. Bashenft holds 2.2bn of proven reserves and is the second largest producer in the Volga-Urals region after Tatneft. The company produced around 234,000b/d from around 140 fields in Bashkiria and neighbouring Tatarstan and Udmurtia in 2008. The company’s biggest revenue earner, however, is its large affiliated refining business, which comprises the Ufaneftechim, Novoil, Ufaorgsintez and Ufimskiy plants, and accounts for around 10% of Russia’s refining capacity. Production of refined products in 2008 stood at 420,000b/d. Marketing arm Bashkirnefteproduct has around 317 service stations in the region. Sistema is now pushing to acquire full ownership of the Bashir assets. Sistema will reportedly invest RUB100bn (US$3.24bn) in upgrading its Bashkir refineries in 2011-2014. The announcement was made by Rustem Khamitov, the governor of Bashkiria, in September 2010. The © Business Monitor International Ltd Page 56
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