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Russia may buy oil debt
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August 31, 1999: 7:17 a.m. ET
Report: Kremlin offers to buy overseas obligations of bankrupt Sidanko
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LONDON (CNNfn) - Russia's government has offered to buy out the debt that the bankrupt oil company Sidanko owes a syndicate of Western banks or to liquidate the company, along with three of its subsidiaries, according to a published report.
But analysts say the offer, reported Tuesday by Russia's Prime-Tass news agency, is little more than a strategic bluff aimed at forcing Sidanko to settle with its creditors.
"I don't think there's a chance in hell this is going to happen," said one London-based oil analyst who requested anonymity. "I just think the government's trying to push the companies a bit in reaching an amicable deal."
Among those staking a claim to a portion of Sidanko's debt is petrochemical giant BP Amoco, which owns a 10 percent stake in Sidanko and 20 percent of its voting rights, but holds just one seat on the company's board.
BP Amoco has reportedly been at loggerheads with Sidanko's principal shareholder, Interros -- a conglomerate run by oligarch Vladimir Potanin -- over plans to restructure Sidanko in the wake of its bankruptcy earlier this year. Potanin, who owns a 43 percent stake in Sidanko, is said to have blocked efforts by BP and other international creditors to appoint an external auditor to run the company.
In July, Sidanko shareholders struck an agreement involving the restructuring of $217 million in Sidanko debt, according to the company. But creditors at Sidanko's Chernogorneft subsidiary have left a settlement in limbo by failing to reach a consensus on how to restructure $47 million of debt in the unit.
Against this squabbling backdrop, oil rival Tyumen Oil Co. has made it clear that it wants to buy Chernogorneft, Sidanko's production unit.
Tyumen and others are eagerly eyeing Sidanko's estimated 300 million barrels of reserves and vast natural gas deposits in Siberia and Russia's Far East.
Tuesday's Tass report said Russian officials offered to buy out Sidanko's debt from overseas creditors at a meeting Aug. 26 chaired by First Deputy Prime Minister, Viktor Khristenko. The report said the company would face liquidation if the proposal failed.
The reports could not be corroborated Tuesday morning.
But analysts said the travails of western oil companies such as BP Amoco in recouping debts in Russia are likely to deal a further setback to the country's efforts to lure investors.
France's Elf Aquitaine has already pulled out of the country, while BHP recently put its assets in the Northern Territories up for sale. Royal Dutch/Shell has also run into roadblocks in its dealing with Russian natural gas producer Gazprom.
--from staff and wire reports
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