As the Russian government prepares to sell either a controlling or minority stake in the firm to plug a budget deficit, oil major LUKOIL has told the Russian government it wants to buy smaller rival Bashneft, reported the Reuters.
The Russian economy has been hit by tumbling crude prices and Western sanctions over Moscow's role in the Ukraine conflict which has left a yawning hole in its budget and the government of President Vladimir Putin has ordered a privatization drive to cover this gap.
Bashneft, which it nationalized just two years ago, has a 75 percent share of the state. Quoting several government and industry sources Reuters reports that the government was debating whether to limit the sale to 25 percent through a stock market offering or to sell a stake of more than 50 percent.
"There are many parties showing interest, including LUKOIL," a government source told Reuters.
While the Russian economy ministry was not immediately available to comment, LUKOIL and Bashneft declined to comment.
LUKOIL is Russia's biggest private oil firm and the second-largest oil producer. Coming after more than 15 years of consolidation and nationalization which allowed the Kremlin to regain control after a chaotic privatization in the 1990s, a Bashneft sale to a private buyer would represent a significant turnaround for the world's largest energy industry.
If crude prices stay at around $30 per barrel, there would be an additional shortfall of up to 2.5 trillion rubles ($31.7 billion) in the budget this year and the measure is due to this plight facing the budget.
State-owned Rosneft had long been considered a front-runner to snap up Bashneft since the company has swept up a string of energy assets over the past decade and a half. The company is led by Putin's closest ally in the energy sector Igor Sechin.
The company has been made much less acquisitive in the past two years due to a steep decline in oil prices combined with Rosneft's heavy debt.
Government share in Rosneft which is Russia's top oil major is being considered for sale to shipping firm Sovkomflot and diamond miner Alrosa as part of its privatization drive.
With an output of 400,000 barrels per day, Bashneft is Russia's sixth-largest oil firm. A buyer could secure control in the producer and large refiner for less than $2.5 billion since the market capitalization of the firm stands at $4.5 billion.
Before oil prices began to nose-dive in mid-2014 and the ruble's value also plunged the company used to be valued at as much as $13 billion.
As the economy ministry is arguing a placement in the stock market could generate more money, the government had yet to decide whether to sell control in Bashneft.
Bashneft has has been a target for some of the country's richest and most influential businessmen and a history of moving in and out of state control over the past 20 years.
Before being sold to telecoms billionaire Vladimir Yevtushenkov, it was first privatize in the 1990s and then nationalized in the last decade. Vladimir Yevtushenkov was put under house arrest leading to another nationalization of Bashneft as the oligarch fell out with the Kremlin.
Allowing the government to avoid additional painful budget cuts ahead of parliamentary elections set for September, its new privatization plan is expected to fetch between 500 and 800 billion rubles.
(Source:www.reuters.com)
The Russian economy has been hit by tumbling crude prices and Western sanctions over Moscow's role in the Ukraine conflict which has left a yawning hole in its budget and the government of President Vladimir Putin has ordered a privatization drive to cover this gap.
Bashneft, which it nationalized just two years ago, has a 75 percent share of the state. Quoting several government and industry sources Reuters reports that the government was debating whether to limit the sale to 25 percent through a stock market offering or to sell a stake of more than 50 percent.
"There are many parties showing interest, including LUKOIL," a government source told Reuters.
While the Russian economy ministry was not immediately available to comment, LUKOIL and Bashneft declined to comment.
LUKOIL is Russia's biggest private oil firm and the second-largest oil producer. Coming after more than 15 years of consolidation and nationalization which allowed the Kremlin to regain control after a chaotic privatization in the 1990s, a Bashneft sale to a private buyer would represent a significant turnaround for the world's largest energy industry.
If crude prices stay at around $30 per barrel, there would be an additional shortfall of up to 2.5 trillion rubles ($31.7 billion) in the budget this year and the measure is due to this plight facing the budget.
State-owned Rosneft had long been considered a front-runner to snap up Bashneft since the company has swept up a string of energy assets over the past decade and a half. The company is led by Putin's closest ally in the energy sector Igor Sechin.
The company has been made much less acquisitive in the past two years due to a steep decline in oil prices combined with Rosneft's heavy debt.
Government share in Rosneft which is Russia's top oil major is being considered for sale to shipping firm Sovkomflot and diamond miner Alrosa as part of its privatization drive.
With an output of 400,000 barrels per day, Bashneft is Russia's sixth-largest oil firm. A buyer could secure control in the producer and large refiner for less than $2.5 billion since the market capitalization of the firm stands at $4.5 billion.
Before oil prices began to nose-dive in mid-2014 and the ruble's value also plunged the company used to be valued at as much as $13 billion.
As the economy ministry is arguing a placement in the stock market could generate more money, the government had yet to decide whether to sell control in Bashneft.
Bashneft has has been a target for some of the country's richest and most influential businessmen and a history of moving in and out of state control over the past 20 years.
Before being sold to telecoms billionaire Vladimir Yevtushenkov, it was first privatize in the 1990s and then nationalized in the last decade. Vladimir Yevtushenkov was put under house arrest leading to another nationalization of Bashneft as the oligarch fell out with the Kremlin.
Allowing the government to avoid additional painful budget cuts ahead of parliamentary elections set for September, its new privatization plan is expected to fetch between 500 and 800 billion rubles.
(Source:www.reuters.com)
