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Russian gas monopoly to bid for Yukos

Russian gas monopoly to bid for Yukos
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Russian natural gas monopoly Gazprom is to try and buy part of Yukos’s oil production business.

Gazprom has huge debts of its own of around 12 billion euros but it believes it can raise the seven billion euros it needs to go ahead with the purchase. Sergei Bogdanchikov, the head of Gazprom’s oil unit, said: “According to both national and international estimates which take into account the reserves and all other elements, Gazprom and Deutsche Bank have come to the conclusion that buying Yukos’s core production unit is the most attractive option.” Deutsche Bank believes Gazprom needs to expand in the oil sector if it wants to compete internationally with the likes of Exxon, Shell and BP. At the moment, Gazprom is a relatively small player in Russia’s oil sector. It is in fifth place, producing less than half as much oil as Yukos which pumps out 1.7 million barrels of oil on a daily basis. Gazprom’s ambitions apparantly have the blessing of the Kremlin which wants to regain control of the gas and oil sector by slimming down the number of Russian players and creating one giant operator. The troubles at Yukos has provided the solution. Yukos’s senior management is either in jail or abroad as investigators reclaim billions of euros. The company is now expected to be broken up and sold off.