Putin orders Transneft and Transnefteproduct to consolidate

Apr 14, 2007 02:00 AM

Russia’s President Vladimir Putin signed a decree to transfer to Transneft 100 % in Transnefteproduct. One of the after-effects could be the management upheaval in Transneft. The contract of company’s chief Semyon Vainshtok expires in September.
Vladimir Putin sealed the Transneft decree on April 16, 2007. The president gave five months to the government to ensure contributing 100 % in Transnefteproduct to the stock capital of Transneft in settlement for a new issue of common stocks.

For this purpose, Transnefteproduct was crossed out of the list of strategic enterprises. At the same time, the government’s stake in Transneft should be maintained at no less than 75 % plus a stock.
The concept of creating a united pipeline company based on the assets of Transneft and Transnefteproduct dates to 2005. Since then, its expediency has been doubted from time to time and implementation shelved for a while.

Top management of Transneft has never hailed the idea and Sergey Grigoriev, who is vice president of the company, used to call it another headache.
“Transneft will execute the decree,” Grigoriev assured, “but we haven’t been officially notified about it.”

Transneft is a monopoly owner and operator of Russia’s oil pipelines, delivering 93 % of the crude produced in the country. The company owns 48,700 km of trunk pipelines, 418 oil pumping stations and 870 storage facilities for 14 mm cm.
Transnefteproduct is a monopoly for pipeline supplies of petroleum. The overall length of its main pipelines equals 19,300 km.

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