Russian Oil Oligarchs Always Fight

Oligarch Roman Abramovich is intended to conquer Russia's oil market

The supposition that the oil company Severnaya Neft (Northern Oil), which is controlled by Federation Council member Andrey Vavilov, will be sold to the state oil company Rosneft, has not become true. Governmental sources of information said that the company was sold to the structures, that were close to the owners of another major Russian oil company, Sibneft.

It should be mentioned here that the company Severnaya Neft has a licence to develop a large oil deposit Val Gamburtseva, which in situated in Russia’s north. This deposit is rather a controversial one, for there are several oil giants that have a great wish to work there. One of those companies is LUKOIL, which disputes Severnaya Neft’s right to develop Val Gamburtseva and other deposits. LUKOIL stated to the potential buyers of  Severnaya Neft that it would consider the purchase of this company as an unfair transaction.

APN.Ru website explained this situation as follows. Andrey Vavilov, a member of the Federation Council (Penza region Senator), and actual owner of the company Sibneft, Roman Abramovich (the governor of the Chukotka region, a well-known Russian oligarch), have been partners for a long time already. In the middle of the 1990s Andrey Vavilov took the position of the first deputy Finance Minister. Roman Abramovich was going to become a very influential person in President Boris Yeltsin’s milieu. Vavilov used to render various services to Abramovich at that period. In particular, he taught the today’s oligarch to organize state cash flows and make them become private cash flows. Abramovich funded Vavilov’s election campaigns in 1995 and 1999. Reportedly, there were five million dollars spent on those campaigns: three million in 1995 and two million in 1999. However, despite such a considerable financial support, Andrey Vavilov was never elected as a deputy of the Russian State Duma. It probably happened because of the fact that Vavilov was implicated in several financial scandals during the time of his work at the Finance Ministry. He was also a witness of several criminal cases, which were investigated by the Russian Office of the Prosecutor General.  This fact also became rather important during his election campaign to the Federation Council.

On the other hand, Vavilov’s commercial affairs were rather successful. In 1999 he managed to oust the company LUKOIL from another oil company, Komineft, which was then transformed into the company Severnaya Neft. Despite LUKOIL’s pressure, this small company managed to survive. Later, it even won the tender for the development of Val Gamburtseva deposit. No one had any doubts that Yeltsin’s team helped Andrey Vavilov in his contradiction with LUKOIL. Now the senator is going to give this company to his friend, Roman Abramovich. It is give and take, so to speak.

The relations between two Russian oil giants, Sibneft and LUKOIL, are rather remarkable in this respect. Moscow mayor Yury Luzhkov had a fight with LUKOIL’s manager, Vagit Alekperov in the middle of the 1990s. Luzhkov decided to make him leave Moscow’s petrol market. Moscow businessman Shalva Chigirinsky, who was in charge of that market, got Roman Abramovich involved. As a result, LUKOIL had to give way to Sibneft, which gained the control over the Moscow petroleum refinery.

It is rumored that Roman Abramovich’s strategic goal is to acquire LUKOIL’s control stock of shares and to reform the assets of this company. According to experts’ estimate, the purchase of the company Severnaya Neft was another step on the way to conquer the oil market of the country. Even if it is not so, Severnaya Neft is a very good piece of the pie anyway.

Severnaya Neft’s basic assets are the licence to develop a large deposit called Val Gamburtseva. The deposit is situated in the Nenetsky autonomous region of Russia. The company got the licence in 2001 with regional governor Vladimir Butov’s assistance. Criminal proceedings were instituted against Butov owing to LUKOIL’s efforts. The police of his own region searched his office, and Moscow television channels announced that the governor was put on the federal wanted list. The friendship between Alndrey Vavilov and Vladimir Butov was over. It was the local government that started dealing with Severnaya Neft. One shall assume that Vladimir Butov will not have any problems with new owners, so he will be inspired to stand for the rights of a small company.

On the photo: Roman Abramovich

Akhtyam Akhtyrov

Translated by Dmitry Sudakov

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Author`s name Olga Savka