State's stake in LUKoil to be sold at market price

The Russian Federal Property Fund (RFFI) will sell the state's LUKoil shares at market price, the fund's official spokesman, Vladimir Zelentsov, said today.

He refuted reports in the media that the fund would sell the state's LUKoil shares at a nominal cost.

He recalled that the government in the person of the Economic Development and Trade Ministry or the Federal Property Management Agency would establish the price of the state's shares. After that, an independent appraiser would set the starting price of the shares at the auction based on the market. The auction will be open, and therefore, the selling value of the shares could surpass the starting cost considerably, he said.

At the end of July, Prime Minister Mikhail Fradkov signed an ordinance on the sale of the state's 7.59% stake in LUKoil at an open auction in a single lot (to one investor). Sixty-four million LUKoil shares will be sold at a nominal cost of 0.025 rubles per share.

LUKoil is the second largest private oil company in the world in terms of the size of its proven hydrocarbon reserves. The company controls 1.5% of the world's oil reserves and produces about 2% of the world's oil. The company plays a key role in the Russian energy sector; it is responsible for 19% of Russia's oil production and 19% of Russia's oil refining.

The Federal Property Management Agency published information that said the agency had determined the price of 7.59% of LUKoil at 36.76 billion rubles. According to the report, the shares cannot be sold at a lower price.