Trophy race

New Delhi, Jan. 23: The Russians expect at least $6 billion for a 15 per cent stake in the Yugansk oilfield of Yukos, which leaves ONGC-Videsh?s(OVL) offer of $2 billion for the lucrative asset far short of the price.

Sources say the figure the Russians want for the field has been conveyed to OVL by the top management of Rosneft during their latest round of talks.

Clearly, the $9 billion, which the Russian government-owned Rosneft paid for the Yugansk oilfield in the recent auction, was way below the market price. The auction was, in fact, viewed in Russia as a way to redress the chaotic privatisation of the Russian oilfields in the 1990s during the course of which Mikhail Khodorkovsky had acquired these huge assets at throwaway prices.

Rosneft cannot benchmark the price for the 15 per cent stake that OVL is interested in at the auction price. It has worked out the price based on the prevailing crude oil prices, which are ruling at over $46 per barrel and have, in turn, led to the appreciation of oilfields worldwide.

To complicate matters further for OVL, China Petroleum National Corporation is reported to have come up with an offer of a $6-billion loan for Rosneft in return for assured crude supplies from the oilfield. The medium-term loan appears to be a better proposition for the Russians than an outright equity sale.

Vestiges of the US-Soviet cold war-era rivalry have also surfaced with western experts managing Yukos fleeing Russia and moving the US courts to create a scare among firms that want to do business with Rosneft and Yukos.

The Russian economy is also picking up on the back of surging oil exports and Rosneft is in a better position to develop the oilfield on its own. OVL had earlier managed to acquire a stake in the giant Sakhalin I offshore oilfield on reasonable terms because the Russians were cash-strapped. The economic revival has changed the scenario and they can now drive a harder bargain.

An OVL team led by managing director R. S. Butola had visited Moscow last month in the hope of being accommodated as a partner in the bidding for Yugansk, the largest oil-producing asset of Yukos.