By John Helmer, Moscow
A former high-ranking Russian government official with an influential history has emerged behind the group of Russian shareholders who control RusPetro, the small oilfield operator which has managed to reach a market capitalization of ₤640 million ($1.04 billion), since it first listed on the London Stock Exchange (LSE) on January 18.
Kirill Androsov (image left), 49, a St.Petersburger by training and early career, was a deputy chief of staff under Prime Minister Vladimir Putin between May of 2008 and April of 2010. That was his highest and last government post. For the next nine months he beat a path through the money markets to launch an investment fund called Altera Capital. Registered in Luxembourg, and with a Moscow office, Altera was reportedly launched with $300 million in capital. Russian reports indicate the stakeholders are Russian and foreign structures, but the fund itself does not identify them. Working with Androsov is a former government colleague, Vyacheslav Pivovarov.
Altera is also officially registered in Zurich with the same Kirill Androsov. The Swiss lawyer used to open this business is Benno Hafner. He is also chief executive of something called International Legal Foundation. Swiss records show that this group includes two Russians with signing rights — Irina Savelieva and Alexander Minakov.
Altera has been identified by London sources as a key element in the group which established RusPetro and launched its initial public offering (IPO) with Merrill Lynch, Renaissance Capital, and Mirabaud Securities. The unusual combination of Sberbank money, oilfield uncertainty, and lack of official Russian registered oil reserves has not deterred the three underwriters and Credit Suisse from active boosting of the shares. Buying by investors lifted the share price 72% between January and April 4, when it hit a peak of 230 pence. It has fallen back through the 200-pence level since then, and is currently at 197 pence.
6-MONTH SHARE PRICE CHART FOR RUSPETRO
Russian sources say the reliance by RusPetro on oil reserve calculations by US consulting firm DeGolyer and MacNaughton fails to take into account the risk that initial well flows may stop suddenly; and that replacement well-drilling may not be fast and wide enough to sustain the company’s oil production targets and long-term profitability. One Russian source claims to have drilled in the area in the 1990s only to suffer a catastrophic loss of drilling equipment in a subsidence.
The credibility of the RusPetro float thus depends on the Russians who appear to be the principal shareholders. The IPO prospectus identifies several of these and a number of the investment identities they are using for their stakeholding. These include Vladimir Marchenko, Andrei Likhachev, Andrei Rappaport, and Alexander Chistyakov. Chistyakov is also the company’s executive director and president; he apparently outranks the chief executive, a US oilfield specialist, Donald Wolcott.
A vehicle called Limolines Transport Limited, attributed to Likhachev, appears to be the largest stakeholder with 29.7% as of last month. Half of Limolines is owned through a Panama entity by Likhachev, currently an employee of Oleg Deripaska’s. The other half of Limolines is reported by the RusPetro prospectus to be owned by a British Virgin Islands cutout controlled in turn by Altera. So who owns that, and who owns Altera?
The question is asked because RusPetro is loss-making and both its present solvency and future growth depend on money flowing from the state through Sberbank. It isn’t known whether the loan agreements covering this relationship have been reported to the government in compliance with the new beneficiary disclosure rules introduced by Putin’s order of December 28, 2011.
Androsov’s influence in the flotation was strong enough to persuade a market source that he is shareholder, either directly or as a trustee for others who do not wish their interest in RusPetro to be known. Androsov was asked, but his spokesman at Altera said he is travelling and incommunicado until the Russian May holidays end. RusPetro has issued a denial.
“Kirill Androsov is not a shareholder,” says RusPetro spokesman Natalia Erikssen. “He is manager of Altera Investment Fund which is an independent investment fund. Altera indirectly owns almost 15% of Ruspetro through its 50% interest in Limolines which holds 29.7% of Ruspetro. RusPetro does not have a controlling shareholder. Ruspetro owns 100% of all subsidiaries. There are no partners or minority shareholders in the group, except as shareholders part of the free float on the LSE.”
Androsov’s career as an influential apparatchik commenced in the 1990s at the state property agency of St. Petersburg. He then moved to Lenergo, the regional St.Petersburg power utility, between 1999 and 2004. Likhachev was the chief executive at Lenergo at the same time; he had been one of Androsov’s bosses in the St.Petersburg government in the earlier years. In 2004 Androsov and Likhachev were also registered as co-founding shareholders in something called Aurora Management, registered at a village in the Leningrad region.
From 2004 to 2008 Androsov was at the federal Ministry of Economic Development and Trade, specializing at first in tariff fixing and infrastructure planning. He was promoted to Deputy Minister, before going higher up to join Putin’s office as an administrator for state property management and regional investment. He appears to have been the supervisor and booster of such projects as the construction of the new sea port at Ust-Luga and the takeover by state tanker company Sovcomflot of Novorossiysk Shipping Company.
The transaction record identifies key policymaking influentials who were Androsov’s patrons and friends. One of them, German Gref, reappears as President of Sberbank, when RusPetro needed money. When Androsov was at the Economic Development Ministry in Moscow, Gref was minister; before then the two were reportedly colleagues in their St.Petersburg days.
The record of Androsov’s association with the Russian oil business has largely been at the trading and transportation end of the production and sale chain. There is a publicly accessible file of claims and allegations about Androsov; these involve privatization of state assets, state budget spending support for commercial companies, and commercial rivalries for state land and urban construction projects. If they are credible, they suggest that Androsov is a skilled coordinator of capital and an effective lobbyist between sources and recipients of state cash. Influence, but not illegality, is suggested by the kompromat. If the materials are not credible, Androsov isn’t available for the time being to say.