vlad.tribnet.com / Issue #167 / Business / Reading article...

National and Sakhalin press recently reported that the Sakhalin government and one of Russia’s leading financial organizations, Uneximbank, plan to create a joint bank.

The new bank will open in Yuzhno-Sakhalinsk this spring, well-informed sources say. The announcement has sent ripples through financial quarters because not only will more banking services be available here, but Unexim has made explicit its interests in the oil and gas industry.

This suggests that a second round of fights for the Sakhalin shelf may be on the way, industry sources say. And, unlike the previous bidding, which mostly drew foreign and domestic oil and gas companies, Russia’s leading financial groups will try to participate as well.

Here are the scenarios that the new “shelf invasion” might take, according to Uneximbank, industry sources, and the national media. Uneximbankowns more than 80 percent of the stock in Sidanco, a company that is largely unknown on Sakhalin, but ranks fourth among Russian oil extracting and refining firms. Sidanco controls many refining subsidiaries that deal in fuel supplies.

Uneximbankuses the company as a tool to join far more ambitious and extensive projects than just selling fuel internally or crude oil externally. In a deal signed last fall by UneximbankPresident Vladimir Potanin and British Petroleum Chief Executive John Browne, BP agreed to buy a 10 percent stake in Sidanco for $571 million. This will allow the British investor to access the development of Kovyktinskoye gas condensate field in Irkutsk Oblast.

Reserves at Kovyktinskoye, East Siberia’s richest field, are appraised at 1.5 trillion cubic meters of gas. Participants say the Kovyktinskoye field will be a major source of gas exports to China and Korea, as well as to the Russian Far East — potential buyers of Sakhalin fossil fuels.

The new consortium will build a $7-10 billion pipeline to start pumping Kovyktinskoye gas in the early 21st century – just as the Sakhalin shelf starts to produce first its gas. Obviously, these two extensive projects are bound to intersect at some point and impact each other.

“Sakhalin projects are important for us,” said Uneximbank’s Potanin. “They may very well add to Kovyktinskoye in terms of developing the markets of China, Japan and Korea.”