The world's largest oilfield services group, Schlumberger (registered in the Netherlands Antilles, headquartered in Houston and Paris), has come close to buying a stake in the Russian drilling company Eurasia Drilling Company (EDC). In 2015, the first attempt to make a deal broke down, and from the moment the second application was filed in the summer of 2017, the Federal Antimonopoly Service (FAS) and the Ministry of Natural Resources impose new restrictions on the terms of the purchase.
In February 2018 Schlumberger sent another request to the FAS to purchase a stake in EDC, but it was not known which company was offering the deal.
Vedomosti found out that Schlumberger asked FAS permission to buy not 51%, as it was before, but only 49% in EDC. The oil service company plans, in addition, to buy this stake indirectly, but through a joint venture in which Schlumberger will have 49%, and its pension fund - 51%. The source of the proposal to Vedomosti was told about the source close to one of the parties to the forthcoming deal between Schlumberger and EDC, as well as the person who saw the terms of the application filed in the FAS Schlumberger.
Thus, the oilfield services company can become the beneficial owner of only 24% of the EDC. In Schlumberger's application, however, an option is assumed for an additional stake in EDC shares, one of Vedomosti's interlocutors says, but he does not say what the terms of this option are. Confirm that the option is specified in the proposal Schlumberger, "Vedomosti" failed.
Schlumberger agreed with EDC shareholders that they will buy 51% of the company from them at the end of July last year, and in August the Minister of Natural Resources of Russia, Sergey Donskoy, decided to remind that EDC is an enterprise of strategic importance for Russia, as the company operates on subsoil plots of federal significance. By coincidence, it was on July 1, 2017, that amendments to Law No. 57, "On Foreign Investments in Strategic Enterprises," which prohibited offshore companies (and the Netherlands Antilles offshore), apply for control in strategic enterprises, says the antimonopoly lawyer Ilya Fedotov. Formally, Schlumberger fell under the action of these amendments, the source of Vedomosti, close to one of the parties to the deal being prepared, states. That is why the new structure of the deal can help circumvent the restrictions, Fedotov said.
The representative of the FAS refused to discuss the terms of the transaction with EDC shares offered by Schlumberger - in his opinion, this information constitutes a trade secret, carries the stamp "For official use" and is not subject to disclosure. Representatives of EDC and Schlumberger did not answer Vedomosti's questions.
One of the reasons that hampered the approval of the deal Schlumberger and EDC, were sanctions, Vedomosti's interlocutors, who spoke about the structure of the offer, admit. It was not clear how to proceed with the transfer of the management and control of the EDC to the Russian side if the next wave of US sanctions completely covers the oil industry in Russia. But the FAS settled with Schlumberger the terms of the agreement, including the issue of transferring the management and control to the Russian side in the event of imposing new sanctions, deputy governor Andrei Tsyganov said at the end of March. The FAS is ready to raise the issue of approving the Schlumberger deal and EDC for the nearest government commission, Tsyganov said. But when she can pass, he did not say.
Simultaneously with the Schlumberger RFPI together with the fund Mubadala from the UAE intend to purchase 16.1% in the EDC, wrote RBC. This transaction does not exclude the possibility of selling a share in the EDC to an oilfield services company, assures both Vedomosti's interlocutors. The RFPI representative refused to comment on the deal with EDC, and the representative of Mubadala did not reply to Vedomosti.
The Russian market of oilfield services is very attractive, the president of Soyuzneftegazservice Igor Melnikov and the director of the Fitch corporation Dmitry Marinchenko agree. Melnikov points out that he is quickly recovering - following oil prices, while EDC has about 20% of the Russian market. Marinchenko believes that even with low prices, the oil industry has enough resources to not save on drilling and investing in drilling: "Therefore Schlumberger would like to strengthen its positions on the Russian market, despite all the political risks." In Russia, ever more complex fields that require new technologies, in particular methods to increase oil recovery (fracturing, horizontal drilling of wells, etc.) are involved in development, the Aton analyst Alexander Kornilov is sure. This can be well earned, he believes, especially after Russia's agreement with OPEC to stop oil production ceases to operate.
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