Real owner of Global Energy company found and why did it not invest into Azerbaijani projects?

Businessman Mikhail Guzeriyev and Swiss trader Glencore have finally agreed to convert debts of RussNeft company into the shares of this company. As a result Swiss company will get 46% shares in the oil company and Guzeriyev’s share will drop to 54%. The debt of the oil company will go down from $5.3 to $2.3 billion, official representative of RussNeft told RBC.

In the early 2000s Glencore has helped Guzeriyev to create RussNeft by allotting credits on the security of the shares of extracting companies. Till lately the trader owned between 40% and 49% shares in the daughter companies of RussNeft.

In 2007 Guzeriyev was forced to leave Russia, because of criminal cases and has sold the company to Oleg Deripaska. When returned in 2010 he returned 49% to the oil company and in 2013 he consolidated RussNeft. But the company had huge debts by that time and at the peak they reached about $7 billion.

In March 2015 Guzeriyev said that he has agreed with Glencore to convert shares of the daughter companies into the head company’s papers. It was planned initially that the Swiss company will get 49% shares in RussNeft. In May 2015 the configuration of the deal has changed – the proposed share of Glencoe has gone down to 46%, because there was no need to coordinate activities with the governmental commission on the foreign investments, said Armen Khanian, chief of the Department to Control Foreign Investments.

Guzeriyev told RBC earlier that in time RussNeft will unite with Neftisa controlled by the businessman and London-based Global Energy company, in which foreign assets has entered. Total resources of all three companies were estimated at 850 million tons of oil (C1+C2), production of 17 million tons a year and refining of 9 million tons a year. According to RussNeft’s annual report, extraction of the company totaled 8.6 million tons in 2014.

* In the mid-2000s RussNeft company entered the Azerbaijani market by signing the production sharing agreement (PSA) on onshore oil extraction. Then the Russian company has signed some other contracts. However, later assets of RussNeft have been changed into Global Energy and it has expanded its activities. At present the company controls five PSA. and it looks like the contract conditions are not observed. SOCAR has, probably, waited for Guzeriyev to solve its problems.—0—