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6 Sep, 2010 11:05

Rosneft appoints new CEO

Russia's number one oil producer, Rosneft has appointed Eduard Khudainatov for a three-year term as CEO to replace Sergei Bogdanchikov.

Prior to his appointment as Rosneft President, Khudainatov was Vice President and then First Vice President in charge of exploration, production and strategic projects since 2008. Before joining Rosneft in 2003 he was the general director of Gazprom subsidiary, Severneftegaz, having previously held positions in the presidential administration.

His predecessor, Sergei Bogdanchikov, had held the position for almost 12 years, and was widely believed to be looking to leave upon the expiry of his contract on September 5. He is widely respected for having guided the Russian oil major through a massive increase in production and the industry consolidation since 2000.

Rosneft's Board Chairman and Russian deputy Prime minister, Igor Sechin, expressed confidence that the new CEO would be well placed to guide the company into a new era.

"Rosneft today is the leader of the Russian oil industry. I am confident that Eduard Khudainatov has the experience and insight to lead the management team as Rosneft enters its next stage of development."

Peter O'Brien, Rosneft Vice President, also described Khudainatov as a long standing oil industry professional.

"I have been working with him for two years already. He knows the oil business well, including its economics. He is an energetic, professional and a sociable person."

Anastasia Sosnova, an analyst from Investcafe, says the new appointment will change little domestically.

“The move isn’t likely to change much strategically in the domestic market. The Company will keep on realizing Governmental policy in the Fuel and Energy sector.”

Sosnova also noted that Khudainatov's successful experience in the development of Yuzhno-Russkoye field, a source for the Nord stream gas project, would contribute to the Rosneft’s international promotion.

“Khudainatov, with his experience of Russian – German cooperation, can introduce Rosneft to foreign markets, that the Company has been trying to fight its way to with much effort.”

Sosnova concludes that it is internationally where Eduard Khudainatov will be looking to implement strategic challenges.

“Rosneft has continually announced about the purchase of German oil refineries from Venezuelan PDVSA, but issues in this direction haven’t advanced much further from talks even with an amicable country. So, a foreign expansion strategy is a serious challenge, as a domestic expansion strategy has already been implemented by the former President Sergey Bogdanchikov.”

Unicredit Securities oil and gas analyst, Artyom Konchin, believes the move tightens government control over Rosneft.

“It amounts to a bit of a more consolidated control over the company from the Government site that perhaps will be a bit less volatile in its decisions and probably the leverage that the company itself could weight over the government could be less.”