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By John Helmer, Moscow

The conflict between state pipeline company Transneft and Summa Capital over which of them will control the Novorossiysk Seaport Company is almost over, and the winner is — the Russian state. But wait – who is at the sharp end of the state, and who has got hold of the handle?

Transneft now owns the 10% shareholding which had been bought from the free-floating pool of shares in the market during September by Moscow-based Uralsib Bank, Transneft sources have revealed in Moscow this week. Transneft chief executive Nikolai Tokarev had said on October 1 that the size of the shareholding bought by Uralsib Bank had been 9%, not 5%, as had been reported publicly in September. But Tokarev didn’t say at the time whom Uralsib had been acting for.

There was no contradiction between the press reports and Tokarev’s claim. The first bloc of Novorossiysk shares which Uralsib Bank bought on Tokarev’s instructions show up in the trade volume statistics for September 11:

Source: Bloomberg

The price paid appears to have been $8.40 per share; that’s a 12% premium on the week before. Expenditure, according to the chart – about $109 million. According to Moscow press reports citing sources, the outlay was $117 million, so Transneft may have paid a commission of 7.3% to someone. Share dealing over the next four weeks was thin to non-existent, until the chart reveals three more trades on September 26, October 9 and 10. The Novorossiysk company website claims the free float amounted to 24.6% before Transneft commenced buying. Presumably it has shrunk to less than 15% now. Those who sold to Transneft have pocketed more than $200 million.

The port company owns Novorossiysk on the Black Sea; a terminal at Kaliningrad, on the Baltic; and Primorsk oil port, on the Gulf of Finland. Transneft already holds 25% plus a half-share through the Novoport Holding vehicle, while Rosimuchestvo, the federal state property fund, holds 20% and the state railways, 5.3%.

Summa Capital, owned by Ziyavudin Magomedov, owns 25% plus a half-share in the port company through Novoport Holding, but until recently it has exercised operational control. Transneft has publicly challenged this control; ousted the chief executive; and taken Summa Capital to court in St. Petersburg. For these episodes, see this and this.

The federal government has also been planning to privatize its 20% stake by year’s end. But the Transneft share-buying operation may signal that Tokarev will take operational control of the port company without the state share sale. Tokarev has also announced publicly that he is ready to buy Summa’s 25% stake; Summa has said it isn’t selling. A spokesman for Summa, Evgeniy Timoshinov, said today: “N[ovorossiysk] is a strategic investment for us; we do not plan to sell our stake.”

So how to interpret Tokarev’s $200 million shopping spree? Maritime sources in Moscow and in London agree that it’s a preemptive strike. They differ on who the target is.

According to one source, the price for Magomedov’s 25% would be higher if he accepts Tokarev’s offer now, rather than waiting, placing his bid meantime for the state’s 20%; and then losing to Tokarev or another bidder in the outcome. Timoshinov for Summa says that “it is premature to speak on the question of [Summa’s] possible participation in the privatization. We must wait for the conditions of the competition. Only after studying them we will decide on the next steps.”

Interested bidders who have already confirmed their interest in the 20% include several close to the Kremlin, including Igor Sechin and Rosneft, who kicked off their campaign against Magomedov in February of 2012. Twenty months is a long time in Russian politics – it appeared then that Sechin and Tokarev were in league together, backed by President Vladimir Putin, while Magomedov was falling back on Prime Minisdter Dmitry Medvedev and Deputy Prime Minister Arkady Dvorkovich.

That has turned out to be no contest. Worse for the port company, the fight has badly hurt oil cargo volumes, the staple of both Novorossiysk and Primorsk. The recent release of the company’s 9-month results show the damage in technicolour:

Source: http://www.nmtp.info/

Maritime sources in the know suggest that Tokarev’s share-buying has another objective, and that’s to prevent Sechin from influencing the outcome of the privatization share sale in his own favour.

Rosimuchestvo has been reported as ruling that as state companies, neither Transneft nor Rosneft will be allowed to buy the 20% stake. That would leave the bidding open for others who have identified themselves, including Vladimir Kogan, a Putin trustie and oil refinery owner near Novorossiysk; Sergei Shishkarev, who owns the Delo terminal at Novorossiysk port; and several foreign investment funds. Shishkarev’s ambitions for maritime assets have been backed by the deputy prime minister in charge of the military industrial complex, and hence the Navy, Dmitry Rogozin. Which of these might be fronting for Tokarev or for Sechin isn’t clear.

“I think Tokarev and Magomedov are blocking together against the potential problem which Sechin’s presence may cause”, suggests one Russian shipping source. “They are using Transneft’s money so as not to spend private funds.”

Rosimuchestvo was asked to confirm the scheduled date for the sale of Novorossiysk shares, and also whether state companies will be barred from participation. The agency is evidently not in charge, and isn’t sure what the rules will be, or whether there will be any sale at all. The agency spokesman said in response to the questions: “No comments.”

Transneft and Rosneft are not responding to questions either.

According to Summa’s chief executive, Alexander Vinokurov, Transneft’s move to buy the port company’s shares indicates that “the partners share our confidence in the excellent prospects of the company…The fact that Transneft… has paid a good premium for the [share] package, testifies to this. Such a signal to the market from one of the shareholders is especially important right now.”

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