Abramovich or Mittal Going After Russneft?

Now this is crazy news. Reuters is reporting on a new rumor that a competing bid for the recently hijacked oil company Russneft could be backed either by Roman Abramovich or Lakshmi Mittal – putting into question the acquisition plans by Oleg Deripaska’s Basic Element.


Readers of my blog will recall that Russneft, under owner Mikhail Gutseriyev rapidly went from a stellar example of a successful small oil producer to an enemy of the state, including a Yukos-style legal persecution campaign. What inspired the Kremlin’s wrath this time? Russneft acquired Yukos assets in an auction supposedly without government permission, as though these properties were available to just anybody. Didn’t they know that the government already stole Yukos “fair and square”? This rumor provokes three possible theories for now: 1) that it is totally bogus, and neither Abramovich nor Mittal have made any such move; 2) Abramovich, a Kremlin loyalist himself, is hedging an aggressive bet to take control of Russneft with the blessing of the anti-Sechin faction of the Kremlin, which marks a further erosion of the president’s authority; or 3) Lakshmi Mittal, a competitor of Deripaska, wants to send a firm message to Putin, Alisher Usmanov, and Alexei Mordashov and get Arcelor’s foot into Russia’s door (something that has proved to be difficult for the steel magnate). Last month, Yulia Latynina argued that “should either of the first deputy prime ministers, Dmitry Medvedev or Sergei Ivanov, become president, Deripaska might turn around and sell Russneft to a company controlled by Sechin. Preventing Deripaska from selling after the elections could diminish Sechin’s political clout.” It doesn’t require too much imagination to invent further theories that tie in the Russneft bids with the Cherkesov spy wars, all representing rising and falling political fortunes linked to billion dollar deals, not to mention the cover up of criminal acts related to the break up of Yukos. And you thought the next two managed elections were going to be boring. Now that I’ve had my fun speculating, until I see more information I am inclined to believe Theory #1 – Basic Element still looks like it will end up having the honor of holding on to Russneft until the government asks for it to be passed over to them. Sometimes rumors are just rumors, so let’s see how this one plays out.