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Gazprom Launches $13 Billion Sibneft Takeover

Gazprom launched on Wednesday a $13 billion bid for fellow Russian energy company Sibneft, a move aimed at adding crude oil to the production slate of the world's biggest natural gas company. The deal, sent to Gazprom's board of directors for approval, seeks the 72.7% stake in Sibneft currently held by Millhouse Capital, an investment company controlled by Roman Abramovich.

If it goes through, the Sibneft takeover would give Gazprom control of about a third of Russia's oil output.

"We've been consistent in meeting the strategic challenge of diversifying our business portfolio and transforming Gazprom into a world-class energy company," Alexey Miller, chairman of Gazprom's management committee, said in a statement.

"The oil business is a core activity of Gazprom. Given the obvious synergy, Gazprom and Sibneft's businesses will enhance Gazprom's operating efficiency both in Russia and global oil and gas markets," he added.

At the same time, Gazprom said its management committee endorsed buying a 3% stake in Sibneft held by Gazprombank.

Six Western banks helped stitch together a $12 billion loan to finance the deal. ABN Amro Holding underwrote the largest piece of the deal, a $5 billion bridge loan.

Only last week, Alexander Medvedev, deputy chairman of Gazprom's management committee, reportedly said Gazprom is considering building two pipelines with the capability to send as much as 30 billion cubic meters of gas a year to China. It's in discussions on the project with China National Petroleum Corp.

Since most of Gazprom's pipeline network is in European Russia, the company would be required to significantly expand its infrastructure in eastern Siberia.

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Posted 29/09/05

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