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31 Jul, 2007 03:05

Business and Politics collide: Russneft's head resigns

The head of Russian oil and gas producer Russneft has stepped down in the hope of ending the uncertainty about the company's future.

Mikhail Gutseriev, the President of Russneft, one of Russia's top ten oil and gas companies, has resigned from his post to turn control of the company over to a new owner.

On Friday Oleg Deripaska's asset management firm Basic Element applied to the Federal Anti-monopoly Service to buy a controlling stake in Russneft, reportedly for around $US 6.5 BLN.

The Service has a month to make its decision, but sources there say the application is unlikely to be rejected.

Now, the President of Russneft Mikhail Gutseriev says his time's already up, and blames political pressure.

“They proposed that I leave the oil industry 'amicably'. I refused. Then, they began hounding the company to make me more pliable,” said Mikhail Gutseriev.

Tax officials are pursuing a string of claims against Gutseriev, including tax evasion and illegal business practices, both of which he denies.

Gutseriev said on Monday he's giving up control of Russneft to ensure that the company survives. So this private oil firm looks set to pass from one Russian oligarch to another.

But the future of the huge tax claims against Russneft is less certain.

Analysts say Deripaska is a more Kremlin-friendly boss for the firm and expect the tax charges to be reduced or even dropped when he's in place.

“He is completely controlled in terms of strategy, and if the Kremlin or any other government authorities want to buy the assets, then he will obviously resell them. When the owners change, the problems tend to disappear very quickly, and I believe it is possible in this case again. So all the tax claims and legal pressure that the government's putting on the company will somehow go away,” predicted Dmitry Tsaregorodtsev, Senior Analyst of Kit Finance.

Market watchers say Deripaska, whose present assets are mainly in the metals sector, may want to hold on to the oil company in his first foray into the hugely profitable and highly political hydrocarbons business.

Meanwhile, some market watchers expect Deripaska to sell some of Russneft's assets to a state-owned company, such as Rosneft or Gazprom.

Maksim Shein, the Head of research at BrokerCreditService, supposes Basic Element will probably re-sell some of the assets of Russneft or the whole company to another Russian major oil-integrated company.