Interview with Sibneft president Eugene Shvidler by Reuters news agency, August 29, 2003.
Russian oil major YukosSibneft said on Friday it has set its sights on catching up with oil giants BP and ExxonMobil by 2010 by maintaining steady output growth.
Eugene Shvidler, the head of Sibneft, which is due to merge soon with rival YUKOS, told Reuters the two firms were already profitable enough to avoid major layoffs after the merger.
Shvidler is set to become chairman of the combined group.
"By 2010, I see a company that differs little from BP or ExxonMobil", Shvidler told Reuters in a written interview.
"I see continued growth and expansion throughout the remainder of this decade, domestically and abroad and in upstream and downstream."
"Production growth should stabilise at 15-20 percent over the next few years while we continue to seek new export markets and enlarge our domestic distribution networks," he said.
"Sibneft and YUKOS are both relatively lean and efficient. Therefore, we don't see major layoffs as a result of the merger. We will continue, however, to rationalise our headcounts through natural attrition and spin-offs of non-core units", he said.
Shvidler's comments come on the day that BP agreed to complete its landmark $6 billion Russian oil venture with local firm TNK in Russia's biggest post-Soviet inward investment.
The deal gives BP a much needed boost for its stalled output growth to a level that it said takes it from world number three to world number two in private sector oil and gas production, ahead of arch-rival Royal Dutch Shell.
YUKOS agreed to acquire the smaller Sibneft in April in a complex $12-$15 billion cash and equity deal.
YukosSibneft will become Russia's largest oil producer with output of 2.3 million barrels per day, making it the world's fourth-ranked oil producer after Exxon, Shell and BP.
It will rank sixth among private oil and gas producers after Exxon, Shell, BP plus U.S. ChevronTexaco and French Total. YUKOS and Sibneft are already among the world's fastest growing oil firms, but to catch up with Exxon the new entity will need to boost output by at least 40 percent.
YUKOS's core shareholders led by Russia's richest man Mikhail Khodorkovsky will control 50 percent of the group. Sibneft's core shareholders, led by the new owner of English top soccer club Chelsea Roman Abramovich, will get 25 percent.
The remaining 25 percent will be free-floated.
Analysts have said the merger's completion looked under threat after police in July arrested key YUKOS shareholder and Khodorkovsky's chief ally, Platon Lebedev, on charges of state property theft.
Khodorkovsky has said the move was orchestrated by conservative forces in the Kremlin vying to increase their influence over President Vladimir Putin.
Analysts have said Khodorkovsky was the real target of the attack, which was a warning shot to the billionaire to stay out of politics and stop financing opposition parties ahead of parliamentary and presidential elections in 2003 and 2004.
Both YUKOS and Sibneft have said the arrest would not affect the merger, approved last week by Russia's anti-trust ministry. Shvidler said on Friday the companies still planned to complete the merger by the end of 2003.
"The share swap portion of the merger transaction, which covers Sibneft core shareholders' remaining 72 percent of the company, will be completed by the end of the year at the latest," he said.
"An offer to minority shareholders will likely be made sometime after the completion of this step. Sibneft's minority shareholders will receive a fair offer in line with the recommendations of the investment banks," he added.
YUKOS plans to pay Abramovich's team $3 billion in cash for 20 percent of Sibneft, swap their remaining 72 percent in Sibneft for shares in the new company, YukosSibneft, and then make an offer to Sibneft's minority shareholders, who control the remaining eight percent of the firm.
When the deal is closed, YukosSibneft will focus on boosting its market value, which currently stands at $44 billion.
"YukosSibneft trades at a significant discount to its developed market peers. As the company continues to display a track record of performance that matches or exceeds our international peers, we expect to see this difference diminish".