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23 Jun, 2008 15:27

Could Gazprom intervention end TNK-BP row?

Russian labour watchdog has fined the TNK-BP CEO, Robert Dudley $US 125 for violations of the labour code. The conflict between the Russian and British shareholders, which started over the company's alleged underperformance and disagreements over its deve

As the two sides threaten to take each other to court, analysts say minority shareholders should hold on to their shares.

“If the company successfully overcomes this hurdle and starts executing its ambitious investment programme, its capitalisation is bound to jump significantly,” said Dmitry Lyutyagin, an analyst for Veles Capital.

Although the free float is insignificant, amounting to around only $US 100,000 in daily trading, Ivan Mazalov of Prosperity Capital says ignoring minority shareholders is precisely the problem.

“Major shareholders have considered this not as a public company but as a structural unit of its larger entity – which is not true. This company exists as a public company and it is only right that this problem has come to light and now begs a thorough resolution,” he said.

Experts say the conflict creates unexpected investment opportunities in the sector.

The biggest question is whether Gazprom will get a controlling stake in the company. Lyutyagin says if that happens, shares of its oil unit Gazprom-Neft will show major gains.

“Rumours don't appear out of nowhere. If the shareholders don't come to an agreement, there will definitely be a third party that will take control of the company. That party will most likely be Gazprom. Gazprom-Neft shares will go through the roof as a result,” he said.

Experts say the uncertainty over TNK-BP, Russia’s third-biggest crude producer, is unlikely to be resolved at the company’s shareholders meeting on June 26.