Vagit Alekperov, Lukoil's billionaire chief executive officer, and OAO Gazprom Neft CEO Alexander Dyukov signed an accord in Moscow today that calls for the venture to be up and running within 90 days. Gazprom will own 51 percent of the venture; operational control will be split evenly.

President Vladimir Putin's government has built up Russia's state oil and gas companies to dominate the national energy industry, using assets from bankrupt OAO Yukos Oil Co. and stakes in projects such as Royal Dutch Shell Plc's Sakhalin-2 venture.

``It looks like Lukoil is trying to gain additional political support,'' Dmitry Loukashov, an oil and gas analyst at Alfa Bank in Moscow, said today. ``Gazprom Neft may benefit from how projects are financed.''

Gazprom Neft, formerly OAO Sibneft, is Russia's fifth- biggest oil company. Gazprom acquired Sibneft from billionaire Roman Abramovich and his partners for $13.1 billion in 2005, after Sibneft unwound a merger with Yukos.

Sibneft shares rose 3.6 percent to 98.51 rubles today, the biggest gain since Jan. 15. Lukoil shares slid 0.4 percent to 1,942.01 rubles.

Partnership
Lukoil, the country's biggest oil producer after state-run OAO Rosneft, and Gazprom Neft will jointly acquire licenses to explore and develop new deposits, build pipelines and market fuel, according to today's agreement. They may also work together on refining, Alekperov said.

The venture will focus on Russian projects ``in regions of general interest, where it's more effective to work together,'' Alekperov said.

The companies will focus on the northern Timan-Pechora region and the Caspian, areas that Lukoil has said are key to boosting output, as well as eastern Siberia, where Gazprom and Rosneft already agreed to cooperate. Gazprom Neft and Lukoil are also discussing overseas projects, Lukoil Deputy CEO Ravil Maganov said today after the signing.

Bloomberg

Rosneft on Monday entered the race for Yukos gas assets to be sold off this week, filing a surprise bid that threatened to disrupt Gazprom's long-crafted plans to scoop up the assets for itself.

Rosneft, through a new wholly owned subsidiary called NeftTradeGroup, will bid Wednesday for a lot that includes Yukos' 20 percent stake in Gazprom Neft and two gas production units, ArcticGaz and Urengoil, spokesman Nikolai Manvelov said.

He declined to comment further on the bid, but Vedomosti cited an unidentified source close to Rosneft's board of directors as saying that if it won the auction, the company would resell the 20 percent stake to Gazprom.

Gazprom will not directly take part in the auction, but has linked up with other participants to make proxy bids, a source close to the auctions said.

Six companies have come forward with plans to bid in the auction, the source said. Applications closed Monday, and the list is most notable for the lack of any well-established firm.

In addition to NeftTradeGroup, the bidders included Unitex, Group Invest, Sever-Zapad Invest and gas trader Trans Nafta, Vedomosti reported Monday. EniNeftegaz, a subsidiary of Italy's Eni, will also bid in the auction, the newspaper said.

NeftTradeGroup is itself a daughter company of wholly owned Rosneft subsidiary RN-Trade. A spokesman for court-appointed bankruptcy receiver Eduard Rebgun declined to comment Monday.

Independent gas producer Novatek and Energogaz, a consortium comprising ESN Group and Italy's Enel utility, have also said they are interested in bidding.

Spokeswomen for Eni and ESN Group declined to comment Monday on what prompted Eni's decision to go it alone.

Wednesday's lot includes 22 Yukos assets and carries a starting price of $5.57 billion. The second in a series of auctions to sell off the remains of Yukos, Wednesday's sale comes one week after Rosneft won the first auction for $7.6 billion.

Analysts were skeptical Monday that Rosneft would emerge victorious from Wednesday's auction.

"We would still very much expect, in one way or the other, for Gazprom to be the winner of this week's auction," said Clifford Kupchan, a senior analyst at New York-based risk consultancy Eurasia Group. "Given how tightly scripted these auctions have been, it's more likely that [Rosneft's participation] is there to give an appearance of competition or legitimacy where there really is none."

TNK-BP's participation in last week's auction prompted criticism.

Investment bank UBS had a different take, saying in a research note that Rosneft's bid could be used to inflate the price. "Given the fact that the lot is tailored for Gazprom, we believe a Gazprom-friendly entity is likely to be the winner of the auction," the note said.

Rosneft and Gazprom are expected to battle over Tomskneft and Samaraneftegaz, Yukos' largest remaining oil production units. Tomskneft goes on sale May 3.

LUKoil CEO Vagit Alekperov said Monday that his firm was interested in bidding in the May 3 auction.

Vagit Alekperov, who has a 15 percent stake in LUKoil, denied speculation that he or other major stakeholders were planning to exchange their holdings for stakes in Conoco to help the U.S. firm build up its holding.

"We are not going to swap our shares," said Alekperov, who has a fortune of around $10 billion, based on LUKoil's market value of $65 billion.

Speculation has circulated in the market in the past months that Conoco was seeking to take its holding in LUKoil to 25 percent and that LUKoil's managers might help it do so.

Alekperov also said LUKoil had suspended a project to build a refinery in Turkey due to poor economics and would expand its refinery in Bulgaria's Black Sea port of Burgas instead. Burgas's capacity will rise to 10 million tons per year from 7.5 million tons per year now, Alekperov said, without giving a time frame.

The Moscow Times