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Russian oil giants wed, deny Exxon

YUKOS chief Mikhail Khodorkovsky will speak on a panel Friday.
YUKOS chief Mikhail Khodorkovsky will speak on a panel Friday.

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MOSCOW, Russia (Reuters) -- YUKOS and Sibneft sealed a $45 billion merger on Friday to create Russia's biggest oil firm and opened the way to foreign capital, but YUKOS denied it has already struck a deal with world number one Exxon Mobil.

YUKOS CEO Mikhail Khodorkovsky fell short of denying long-term prospects of such a mega-deal involving the new Russian oil giant, as he shared a conference platform with his counterpart from the U.S. giant, Lee Raymond.

"There is no deal, but when there is a deal we will make you happy by telling you,'' Khodorkovsky told reporters on the sidelines of a major economic forum in Moscow.

"We welcome foreign investment. It lowers the cost of capital and raises the value of our assets, but you can't apply the word 'necessary' to it,'' he said.

Raymond has not commented on the speculation.

The Exxon Mobil chief's presence at the forum alongside Russian President Vladimir Putin had fuelled talk the U.S. major would consolidate its world number one status by buying a stake, possibly as much as 50 percent, in the newly born Russian giant.

A London source familiar with the YUKOS-Sibneft deal said: "Exxon Mobil are in the driving seat if they want to be...It's down to whether they have the guts and the brains.''

However, completion of the YUKOS-Sibneft merger, effectively a $15 billion takeover of smaller Sibneft, was seen as the prerequisite to any foreign involvement.

It will simplify talks between the newly-created firm and a potential Western investor, even though minority investors who hold eight percent of Sibneft have yet to be brought into the deal.

The Financial Times also said on Friday that Exxon Mobil was in talks with YUKOS, reviving speculation that has been running for weeks. A trader in Moscow said the market believed a deal was on the cards.

"The market consensus is that talks are under way and this increases the attractiveness of other oil assets as well.''

By 1115 GMT shares in YUKOS were trading up 2.1 percent at $15.95. Sibneft was up 4.7 percent at $3.35, building on strong overnight gains.

YUKOS-Sibneft will become a group with oil and gas output on a scale similar to that of French giant and world number four firm Total, and more than that produced by Kuwait.

It is expected to have a market value of about $45 billion, making it by far the largest listed group in Russia and ranking it number seven in the league of the world's top oil firms by market value.

Under terms agreed earlier this year, YUKOS's core shareholders will pay Sibneft's core shareholders, who hold the other 92 percent of the firm, $3 billion plus 26 percent and one share in the new group.

Sibneft's core shareholders are led by Roman Abramovich, the high-profile and free-spending businessman who bought English premiership soccer club Chelsea earlier this year, and who also sold out of his Aluminium venture Russian Aluminium on Friday.

Britain's BP, the world number three oil firm, has blazed a trail into post-Soviet Russia with a $6 billion plus investment in a joint venture with TNK.

Its Anglo-Dutch rival and world number two Royal Dutch/Shell is investing $10 billion in a new offshore project.

Western firms are desperate to find new opportunities as existing fields dry up and shareholders clamour for output growth. Russia, while still seen as high risk, offers cheap barrels and potentially huge returns.

Russian investors who bought into privatisation in the post-Soviet era are keen to monetise their investments while oil prices are high, and an energy hungry West is seeking supplies of fuel away from the volatile Gulf region.

Another large U.S. firm, Chevron Texaco, is also said to be interested in buying into YUKOS-Sibneft.


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