RUSSIA - Companies' External Investments - SibNeft.

On Aug. 19, 2002, Russian Energy Minister Igor Yusufov indicated that SibNeft was set to bid for a role in the multi-billion dollar deve-lopment of four oilfields in northern Kuwait. It has been prequalified to bid by Kuwait already. LUKoil also wants such a role in Kuwait and is applying to prequalify. LUKoil is the biggest external investor among the Russian oil companies (see OMT and DT).

Alexander Korsik, a senior executive at SibNeft, said the company wanted to take a 10-20% stake as a non-operating partner in an international consortium of oil majors developing the fields. The four fields, with estimated recoverable reserves of 5 bn barrels, are now producing about 400,000 b/d. The consortium should raise their production capacity to 900,000 b/d by 2007.

Yusufov made the disclosure at the opening of a Russia-Kuwait bilateral trade commission meeting in Moscow, headed by himself and Kuwait's acting oil minister Shaikh Ahmad Al Fahd Al Sabah. Senior executives from SibNeft and LUKoil attended the meeting, along with senior executives from RosNeft and TransNeft.

SibNeft's purpose in Kuwait is to learn from the experience of the oil majors in field development, reservoir management and re-exploration. The money it will put up is risk-free, although profit from the equity will be small. But the expertise to be gained will be considerable, as SibNeft is a "radical" company in Russia who's oil production capacity has been almost doubled in recent years (see its profile in Gas Market Trends 11).

Non-operating partners in the consortium will provide support services, with SibNeft yet to indicate what is to offer, and their equity should be a minimum of 10%. International companies in the upper level of the part-nership should hold a minimum of 30% in the consortium. Kuwait accepted SibNeft despite the fact that its main shareholders and most of its executives are Jewish.

In 2001, SibNeft bought two Western-founded trading companies, Olivesta and Vester, which specialise in Russian crudes and oil products. The two were subsequently absorbed by SibNeft Oil Trade (SOT), which was created in late 2000 to handle all of the company's crude oil and refined products exports. SOT took over from Gibraltar-registered export agency Runicom on Jan. 1, 2001.

In mid-2001 Enron's commodity trading expert Richard Creitzman was made head of SibNeft's Corporate Finance department. He had worked for Enron in Russia. Previously he worked for Deutsche Landesbank Girozentrale's structured commodity fiance group in Russia. He replaced Eugene Tenenbaum who became a London-based adviser to SibNeft president and CEO Yevgeny Shvidler. Tenenbaum's new job includes monitoring European ventures in which SibNeft may invest and companies that might become suitable partners in projects outside Russia.