US oil major ConocoPhillips sealed Russia's biggest post-Soviet privatisation yesterday, buying a 7.6 per cent share of the huge Lukoil energy firm and vowing to increase its stake in coming years.
The $1.988 billion (€1.612 billion) deal was seen as a show of confidence in Russian industry amid the crisis over the Yukos oil company, and is expected to boost Lukoil's chances of winning the rights to develop one of Iraq's most promising oilfields.
"This is the greatest privatisation deal in the history of the Russian Federation," said Lukoil vice-president Mr Leonid Fedun, whose company pumps about one-fifth of Russia's oil and is now fully in private hands after the sale of the government's last stake.
"We are expecting a significant increase in the capitalisation of the company," said Mr Fedun, after ConocoPhillips pledged to raise its stake in the firm to 10 per cent by the end of the year and aim for a 20 per cent holding over time.
The share in Lukoil - which has the world's second largest proven reserves after industry leader ExxonMobil - will allow ConocoPhillips to draw closer to its US rival.
The company announced that it had also offered to buy a 17.5 per cent stake in a production sharing agreement allowing Lukoil to develop Iraq's vast, 4 billion barrel West Qurna field, and would pay a further $374 million for a 30 per cent stake in a new joint venture to tap into rich Siberian oil reserves in the Timan Pechora region.
Most oil analysts thought ConocoPhillips, the third largest US oil firm, had got itself a bargain.
"People were expecting a knock-out number," said Mr Ronald Smith, oil and gas analyst at the Renassiance Capital investment bank.
"The auction for the Lukoil stake lasted just over a minute, but ConocoPhillips' victory seemed inevitable since July, when Russian President Mr Vladimir Putin gave his tacit approval to its bid at a meeting with the heads of both companies.
Officials and analysts highlighted the timing of the deal, which comes as Yukos, Russia's biggest oil firm, faces bankruptcy over a huge claim for unpaid taxes.
The case, which many see as politically motivated, has prompted western governments to voice fears over property rights and the legal system in Russia.
