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Gerald Jansen

Gerald Jansen

Gerald is an independent freelance energy analyst based in Rotterdam, the Netherlands.

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Is This Russia’s Most Peculiar Oil Deal?

A Russian company called Rusinvest bought the Antipinsky Refinery and several oil fields in the Volga Urals region that came with it for 110.87 billion rubles (equivalent to 1.5 billion USD). Although at first glance the transaction might seem completely innocuous, there are many stumbling blocks upon closer inspection. One needs to keep in mind that Antipinsky is the first – and thus far only – refinery to be built from scratch in Russia’s post-Soviet history. And it is exactly this refinery that was bought by a one-person company with no previous exposure to oil markets and no evident understanding of what it should do with an indebted downstream asset. In short, another story à la russe when the more one knows about it, the less they understand what is going on and what good does it do.  In 2004, the Russian Fund of Federal Property was soliciting buyers for a modular refinery set that Transneft, the state-owned pipeline transportation company, bought in the mid-1990s from the US firm Petrofac yet failed to utilize. Following a sweeping change in the Transneft’s management ranks all refining projects were deemed to be out of scope and the refinery blocks got stuck in a customs-clearance limbo for more than 5 years. Dmitry Mazurov, having teamed with several regional heavyweights from the Tyumen Region, bought the entire lot for $10 million in a federal auction to which his company was the only participant. In terms of location, there was no need to reinvent the wheel – Transneft wanted to build the refinery in Antipino, right next to a trunk pipeline that would secure the potential export movements. 

Following a swift ascent to the top echelons of Siberian refining, Antipinsky saw its throughput capacity rise to 7.5 million tons per annum, whilst its refining depth increased to 99%. Over the course of the refinery’s 15-year existence, its Nelson complexity index grew from 1 to 5.75. The eventual downfall started off in 2018 when the refinery failed to settle one of its debt payments vis-à-vis Russia’s main state-owned bank, Sberbank. Sberbank happened to be Antipinsky’s largest creditor at that point – of the reported $5 billion that the refinery ran up in arrears, $3.2 billion was with Sberbank. By 2019, the refinery filed for bankruptcy, its erstwhile owners were charged with fraud and Antipinsky changed hands. The refinery was from then onwards managed by a JV that was majority-owned by Sberbank, with the Azerbaijani state oil company SOCAR taking a minority stake, too. 

The Russian bank had no intention of venturing into the oil industry, moreover, it was cognizant of Antipinsky being chronically loss-making, thus necessary steps were taken to auction it off as soon as possible. In the meantime the refinery did not stop completely, it operated under a tolling scheme for Surgutneftegaz. Several months later SOCAR stated that it would not participate in the auction, leaving the JV altogether. Thus, when the auctioning was in effect launched on 18 May, there was no clear understanding of who would be the new owner. Even though many Russian oil and gas firms were rumoured to be interested – amongst others LUKOIL and Russneft - however none of them presented a bid. Bidding a little less than the starting price, the Antipinsky refinery (along with 3 oil fields in the Orenburg Region of Russia with aggregate reserves of 45 million tons) went to the only bidder, a company called RusInvest.

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The company garnered 244 USD in net profits last year, with aggregate proceeds of 222,626 USD in 2020. Although it is certainly true that RusInvest was adversely impacted by the economy shrinking in 2020 amidst all the COVID-19 restrictions and lockdowns yet it never even came close to netting 7-digit USD-denominated numbers with its annual revenues. A micro-sized business by the Russian nomenclature, it was established by a certain Anatoly Yablonskiy in 2014. There is very little information available on Mr. Yablonsky – some Russian online outlets seem to claim he is an erstwhile Ukrainian citizen who, upon fleeing Ukraine in the face of tax fraud charges, managed to make his mark in one of Russia’s regional banks, yet overall the lack of information is almost complete.

According to its own website, the RusInvest group specializes in maintenance of engineering systems and maintenance of public areas. As such, it was hardly considered to be a serious contender against the heavy-hitting big guns of Russia’s business during the Antipinsky auction. Interestingly, Sberbank’s CEO German Gref stated that the bank would be ready to finance the restructuring efforts of the new owner, adding that his bank “had discussed” lending terms with the prospective proprietor. There are two main questions emerging from this unanticipated turn of events. Can the new owner, RusInvest, take proper hold of the refinery or is its participation a premeditated element of a longer chain of transactions? If it is the latter (as the sequence of events might suggest), who will be the final beneficiary? We shall know soon enough. 

By Gerald Jansen for Oilprice.com

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