Both ExxonMobil and ChevronTexaco are expected to submit rival preliminary bids this week for a 25 percent stake in YukosSibneft, the company that will be formed later this year when Yukos completes its merger with Sibneft, according to The Wall Street Journal.
The world's major oil companies are coveting Russia as one of the few places in the world in which large oil reserves are up for sale, particularly as oil prices remain high and Middle East tensions throw doubts on future supplies from that region.
The head of Yukos, Mikhail Khodorkovsky, raised expectations of a deal in July when he said he was in talks with Exxon, Chevron, Royal Dutch/Shell and France's Total on a number of issues.
Banking sources familiar with the situation said that any concrete offer was probably a long way off.
Speculation that ChevronTexaco would take a stake have been around for some weeks and on Monday the San Francisco-based company's CEO, David O'Reilly, told the Financial Times that he saw Russia as an improving investment prospect.
"The former Soviet Union and Russia ... are areas where there is oil and gas. These are areas of opportunity for us," he said.
O'Reilly's remarks came as news reports said Chevron had divested its majority stake in a Kazakhstan joint venture to turn its attention to Russia.
Dow Jones quoted the Kazakhstan Today news agency as reporting that Chevron had sold its 65 percent share in the project to develop the North Buzachi oil field in western Kazakhstan to China National Petroleum Corp. for an undisclosed price. A Chevron spokesman, however, said talks were still ongoing.
Nonetheless, the report added to speculation that Chevron was building up a war chest, helping to push Yukos shares nearly 3 percent higher to $15.08 on the RTS, near an all-time high.
ChevronTexaco declined to comment, as did Exxon's office in Moscow.
If Yukos strikes such a deal, it would be by far the largest foreign investment in a Russian company, eclipsing the $7.7 billion Britain's BP invested in a joint venture with oil producer TNK, a deal that was completed last week.
However, analysts said U.S. oil companies face a number of difficult issues in taking a significant stake in YukosSibneft.
The expected transaction could be overshadowed by a dispute between Khodorkovsky, Russia's richest man, and the Kremlin. In July one of his key allies was arrested on charges of theft of state property.
The Wall Street Journal said Khodorkovsky started to look for a powerful foreign partner to better protect his firm in April and May, when he understood he was running into trouble with the Kremlin.
UFG brokerage said, however, it doubted that U.S. majors would act soon to buy a stake in YukosSibneft.
"Our view is that it is likely that such a deal will happen, although not before the YukosSibneft merger has been completed," UFG said.
A banking source familiar with the situation played down any imminent deal. (Reuters, MT)
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