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Gazprom Inks Deal To Buy Abramovich's Sibneft
Chris Noon, 09.28.05, 2:36 PM ET





New York -

Russian President Vladimir Putin is still aiming to restore the state's influence over the oil and gas industry--but to what end? Possibly to wring every last drop of black gold out of the country to catalyze GDP growth: More oil exports mean more geopolitical gain, helping its bid for WTO entry by the end of this year and a more productive chairmanship of the Group of Eight nations in 2006.

And if you're Russian, "influence over" likely means "ownership of." Gazprom, which came under state control in June when the government increased its stake to above 50%, has agreed to buy a majority stake in the Sibneft oil company for $13.01 billion. An agreement was inked Wednesday between Gazprom and Sibneft's owner, Millhouse Capital, a holding company controlled by billionaire Roman Abramovich.

The deal clears the way for Gazprom to purchase 72.663% of Sibneft shares, the companies said in a statement, the largest purchase in Russian corporate history. And for such a colossal purchase, you'll be needing a similarly colossal loan--Western banks are reportedly ready to offer a $12 billion loan to fund the deal, the largest such loan in Russia's post-Soviet history.

"It's a mutually beneficial deal. Sibneft's owners managed to sell for a high price--when the negotiations started the whole company was worth $15 billion," explained an analyst to The Associated Press. "It is a political and strategic victory," he added.

The analyst calculated Gazprom would see its oil output soar from some 13.1 million tons to about 57 million tons per year with the purchase, ranking it sixth in Russia.

To learn more about the Russian oil scene, watch an exclusive Forbes.com Video Network interview with David Zaikin, chief executive of Siberian Energy.

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