By John Helmer in Moscow
Russia’s state-owned oil pipeline company Transneft has upped the pressure on the controlling shareholders of Novorossiysk Commercial Seaport Company (NCSC) in what one Moscow maritime analyst calls today “an arm-twisting preliminary to next year’s contest over the sale of the 20% state stake in the port.”
While in London the UK High Court enters the third month of the Sovcomflot trial, exposing how Russian maritime officials lie, threaten, plot, and bribe over tanker fleet concessions, the fight over shareholding control of Russia’s second largest oil port illustrates the lack of inhibition with which similar tactics continue to be used for oil concessions onshore, one stage before the oil is loaded for export. Supervising all oil concessions, and with a special interest in the maritime end of the sales chain, according to the London trial testimony, is Deputy Prime Minister Igor Sechin (3rd from left).
Just days after Transneft told Fairplay of its plan to build a new crude oil terminal at Novorossiysk, with larger capacity than Novorossiysk’s Sheskharis tanker terminal nearby, Transneft’s chief executive, Nikolai Tokarev (2nd from left), has broken his customary silence to announce publicly in the columns of a Moscow newspaper that he disputes the port company’s acquisition in 2006 of the oil terminal, which contributes most of the port company’s cargo volume, and 17% of its revenues.
That, Tokarev claimed with unusual menace, “was sold out on the cheap in 2006 in circumstances which seem highly suspicious to us.” Tokarev implied he wants it back. According to Tokarev’s spokesman, Igor Dyomin, Tokarev is threatening that if he doesn’t get his way, he will shift at least 37 million tonnes of crude oil from NCSP’s Sheskharis terminal to a 100-million tonne expansion of the Yuzhnaya Ozereyevka terminal.
Tokarev would not be the first figure in the Russian maritime sector to hint that what he has in mind to back his threats are police methods. “Work is under way,” he said, without identifying who, “to review those decisions. We are discussing such an option in close contact with the terminal’s new owners. … They understand the situation, and we don’t give them grounds for calm.”
Tokarev is speaking of Alexander Ponomarenko (4th from left) and Alexander Skorobogatko. They are identified in the auditor’s notes to the NCSC annual reports, along with their families, as “the ultimate controlling parties”. Russian press reports claim they hold 50.1% through Kadina, an offshore registered company. Skorobogatko is a parliamentary deputy; Ponomarenko the chief executive of the port company.
At the initial public share offering in London in 2007, NCSP’s free float amounted to about 20%. A report by Gazprombank, issued two weeks ago, suggests that this has grown to 30%. The 20% stake owned by the Russian state has been administered by the state-owned Russian Railways Company (RZD), on whose goodwill and spur lines the port company depends to load and unload its cargoes. The 7-man NCSP board, chaired by Ponomarenko, includes 2 federal government officials and 2 representatives of RZD, indicating that, despite the appearance of a majority private shareholding, the board majority comes from the state.
In 2008, there were uncorroborated reports in the Russian press that Ponomarenko and Skorobogatko had sold part (as much as 20%) of their Kadina stake in NCSP to Arkady Rotenberg, who controls the Northern Sea Route Bank (SMP in Russian). About the St. Petersburger Rotenberg, much is whispered, little known for sure. KPMG, the international auditor in charge of SMP’s books, reports an unusual degree of concentration of the bank’s depositors; and of related groups of its borrowers. KPMG also reports that the bank has six individual shareholders, but doesn’t say whether Rotenberg, one of five board members, is one of them. The Gazprombank report reports Rotenberg’s indirect stake at 20%, equivalent to 10% of NCSP, without corroborating it.
If Tokarev is planning a hostile takeover against Ponomarenko and Skorobogatko, the safeguard Ponomarenko may have thought he had in Rotenberg isn’t likely to hold fast.
About this, quaint language in a ratings report in August by Standard & Poors warned that NCSP “lack[s] sophisticated corporate governance”. According to S&P, this means that the “concentrated ownership structure poses additional risks to creditors. Existing corporate governance provides some protection, but doesn’t fully balance inherent conflicts of interest.” If Tokarev’s threat is to be believed, and shareholder votes and board seats can be counted accurately, the real concentration probably favours the state.
The biggest bank creditors to NCSP are Unicredit and Bank Austria Credditanstalt, followed by the Russian state savings bank, Sberbank. The sums outstanding are not notably large ones, in the current Russian context. With the total $480 million of debt outstanding, only $28 million is due in 2009, $140 million next year.
Transneft already controls the oil terminals of Primorsk on the Baltic, Russia’s biggest oil port; and Kozmino on the Sea of Japan, Russia’s newest oil export port. NCSP documents indicate that Transneft also owns a tank farm at Novorossiysk, which delivers crude by pipeline to NCSP’s tanker berths. Brokerage and sector analysts believe Transneft may be seeking to expand its control of NCSP, in conjunction with Gunvor, the oil trader, which is owned by Gennady Timchenko (1st from left), ahead of the start-up of the proposed new Russian crude oil export route to Samsun and Ceyhan, in Turkey.
Since an announcement in May of this year, Gunvor has been working in a joint venture with NCSP to build a new fuel oil terminal on port territory. If Transneft attacks, it is unlikely that Gunvor would side with Ponomarenko.
Renaissance Capital maritime analyst Alexander Kazbegi acknowledges that the commercial calculations behind the new Transneft threats, and the privatisation sale at Novorossiysk, should be understood in the context of the proposed new 1.5 million barrel per day oil flow to Samsun. This oil export route is so new, the Gazprombank report of November 27 failed to mention it. Instead, Gazprombank noted that “a major negative potentially affecting NCSP’s oil shipments is highly congested Bosphorus Strait that could limit effective capacity of oil pipelines to Novorossiysk… In our view, the Strait will not be able accommodate any extra tankers, for instance, if exploration of Caspian greenfields commences in the near future. As Russian oil companies get fully engaged and the Caspian Pipeline Consortium (CPC) rolls out full-fledged oil transportations from Kazakhstan to the Black Sea, the tanker traffic is most likely to get paralyzed. Hence, we see Bosphorus throughput capacity as a natural barrier for NCSP oil transshipment increase.”
In its latest 11-month operations report, NCSC said today its crude oil shipments totaled 40.6 million tonnes, up 4% on the same interval of 2008; refined product loadings rose 20% to 12 million tonnes. Altogether, oil comprises two-thirds of the port company’s aggregate cargo volume. “In our view”, reports Kazbegi, “it is possible that Transneft will use the threat of leaving as a way to get a stake.”
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