Essay on the subject of association of two oil companies “Yukos” and “Sibneft”

Essay on the subject of association of two oil companies “Yukos” and “Sibneft”

Author: Volkov Alexey

The tendency towards the globalization of energy companies have touched also Russian oil companies (ex.: “BP” + “TNK”, “Yukos” + “Sibneft”).

On 22 April 2003 oil company “Yukos” and basic shareholders of “ Sibneft” reached the principal agreement about association. As a result of this association a new oil company will appear in the nearest future in Russia. It will become the 4^th private world output oil company. Perhaps this company also will become the absolute leader in Russian oil industry.

The proved reserves of associate company will be 19,4 billion barrels (this forecast was gotten in accordance with the system SPE).The production of it will be about 2,3 million barrels a day.

The associate company will be call “YukosSibneft”. But perhaps the name of it will be other.

It is intended that the chairman of board of “Yukos” M.Xodorkovsky will head this new company and the incumbent president of “Sibneft” will be promoted to the post of chairman of board of Directors counsel. It is also intended that the majority in the counsel will be independent directors.

The chairman of “Yukos” M.Xodorkovsky considers that this association increases the competitional advantages over other companies by following reasons:

ü It will take place an effect of association of two excellent administrate terms, splendid specialists and high profit assets of this companies.

ü New industrial giant, which has a great production and financial power, will be able to get more effective conduct of an affair.

E.Shvidler the president of oil company “Sibneft” considers that the making of new company will lead to new large-scale projects and reinforcing the positions of Russia on the world market.

Within the limits of this deal the basic shareholders of “Sibneft” will sell 20% of their shares on 3 billion dollars and also change the rest part of shares in ratio 0,36125% shares of “Yukos” to 1% shares of “Sibneft”.

This association can be concluded by the end of the current year on condition that the shareholders and control public organs will give their agreement.

The main indexes of new associate company:

A. Reserves (diagram 1)

The proved reserves of associate company will be 19,4 billion barrels (this forecast was gotten in accordance with the system SPE)

Including:

ü the proved reserves of oil: 18,4 billion barrels;

ü the proved reserves of gas: 5,9 trillion cubic feet.

B. Production (diagram 2)

The production of new company (including the share of “Sibneft” and “Slavneft”) will be about 2,3 million barrels a day. The total share of “Yukos” and “Sibneft” in all Russian oil production will be about 29%.

C. Treatment and sale:

ü The value of treatment in 2002 was 57,7 million tons (421,8 million barrels).

ü The common number of petrol-stations is more than 2500.

D. The situation on the world market (diagram 3)

 New company will be a lider among the private companies only by the index of proved reserves. But by the capitalization it will be only on the 9^th place in the world.

Diagram 1

Diagram 2

Diagram 3

Источники: www.hoovers.com, “НИКойл”, “Эксперт”.

The tendency towards the globalization of energy companies have touched also Russian oil companies (ex.: “BP” + “TNK”, “Yukos” + “Sibneft”).

On 22 April 2003 oil company “Yukos” and basic shareholders of “ Sibneft” reached the principal agreement about association. As a result of this association a new oil company will appear in the nearest future in Russia. It will become the 4^th private world output oil company. Perhaps this company also will become the absolute leader in Russian oil industry.

The proved reserves of associate company will be 19,4 billion barrels (this forecast was gotten in accordance with the system SPE).The production of it will be about 2,3 million barrels a day.

The associate company will be call “YukosSibneft”. But perhaps the name of it will be other.

It is intended that the chairman of board of “Yukos” M.Xodorkovsky will head this new company and the incumbent president of “Sibneft” will be promoted to the post of chairman of board of Directors counsel. It is also intended that the majority in the counsel will be independent directors.

The chairman of “Yukos” M.Xodorkovsky considers that this association increases the competitional advantages over other companies by following reason: It will take place an effect of association of two excellent administrate terms, splendid specialists and high profit assets of this companies.

E.Shvidler the president of oil company “Sibneft” considers that the making of new company will lead to new large-scale projects and reinforcing the positions of Russia on the world market.

This association can be concluded by the end of the current year on condition that the shareholders and control public organs will give their agreement.

The situation on the world market (diagram 3)

 New company will be a lider among the private companies only by the index of proved reserves. But by the capitalization it will be only on the 9^th place in the world.