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Suspicion on Oil Field Developer Petrosakh

Posted April. 06, 2005 23:28,   


Alfa-Eco, a Russian oil field developer, is drawing worldwide attention as its abortive attempt to sell Petrosakh, an oil field developer from the Sakhalin-6 region, to the Korea Railroad Transportation Promotion Foundation, an umbrella institution of the Korea National Railroad Administration (Korea Railroad, today) was revealed.

Alfa-Eco is a unit of privately owned Alfa Group, the largest Russian company, according to a source who is knowledgeable about the Russian business world.

Alfa-Eco group has several large affiliates, including Alfa-Bank (the largest Russian private bank), BP-TNK (the third largest oil company in Russia and a joint venture company with British Petroleum), and mobile operators, such as VimpelCom and Megaphone (second and third largest in Russia). The owner of the Alfa-Eco group, Mikhail Friedman, is the second wealthiest man in Russia, according to Forbes.

Petrosakh, established in 1991, was originally a small sized oil field developer of Saudi Arabia. In 2000, Alfa-Eco took over 95 percent of its shares in order to participate in the oil field project, “Sakhalin-6.” Petrosakh and Rosneft, the state-owned Russian oil company, had secured the 50 percent quota respectively.

However, for the past two or three years, there were rumors that Alfa-Eco was no longer interested in the Sakhalin-6 business and decided to sell Petrosakh.

The Sakhalin-6 region is known to have 1.5 million tons of crude oil reserve, the smallest one of the total of nine Sakhalin energy projects. Exploration in the region has just started and its development process is very slow. Not only that, hampered by the government’s intention to nationalize energy business, Alfa-Eco set out looking for a potential buyer of Petrosakh, and then, Korea Railroad was “hooked up,” according to analysts.

Recent rumor says that Petrosakh was secretly sold to another company after the contract with Korea Railroad was nullified. Petrosakh, whose headquarters is located in Yuzhno-Sakhalinsk, the capital of the Sakhalin region, has run an oil refinery there since 1994, but the company is unreachable in recent days, arousing more suspicion.

Alfa-Eco, with its headquarters in Moscow, has avoided any contacts with the press since the incident.

Ki-Hyun Kim kimkihy@donga.com