- He may be retired from public life but George Bush seems
to cause a stir every time he comes to Russia.
- You name it and market players were buzzing Thursday
about the real reasons behind the former American leader's visit -- an
$18 billion play by U.S. oil giant ChevronTexaco for a blocking stake in
the new Yukos-Sibneft combo? The launch of a $500 million private tie-up
between Alfa Group and Pentagon-connected Carlyle Group? Divvying up the
hydrocarbon resources of postwar Iraq?
- Late Wednesday, before Bush Sr. had even left, traders
in New York had already heard word that he was heading to Russia to help
clear the way for the sale of a strategic stake in YukosSibneft to ChevronTexaco,
which named one of its tankers after Condoleezza Rice, a former board member
who is now his son's national security adviser.
- But it didn't stop there. The buzz continued Thursday
as news spread that Bush was also here to help finalize the creation of
a $500 million private equity fund between Russian oil-to-telecoms giant
Alfa and one of his present employers, the Carlyle Group, a defense industry
insider that counts former U.S. Secretary of State James Baker and former
British Prime Minister John Major among its advisers.
- The U.S. Embassy in Moscow would not comment on Bush's
visit, saying only that it was "private." What is known, however,
is that he will meet with President Vladimir Putin in the Kremlin on Sunday,
when he arrives in Moscow from St. Petersburg. The Kremlin, too, declined
to say what was on the agenda.
- It is also known that Bush will deliver the keynote speech
at a dinner Monday evening for Russian business leaders -- including Yukos
founder Mikhail Khodorkovsky -- on behalf of Carlyle.
- "We use him to speak at conferences and events,"
said Carlyle's London-based spokeswoman Katherine Elmore-Jones. Jones,
however, would not say if a new private equity fund would be officially
announced, but did say that the deal, which the Financial Times first reported
is in the works, was still being discussed.
- But with U.S.-Russia energy ties high on the agenda for
both nations and a bilateral summit on the issue scheduled to begin in
St. Petersburg in 10 days, all eyes were on Chevron and its possible purchase
of a 25 percent plus one share stake in the new YukosSibneft. The Sunday
Times last month quoted anonymous sources close to the deal as saying it
was near completion.
- Yukos shares jumped more than 4 percent on the news in
early trading Thursday.
- "This rumor is based on Bush's visit. He is probably
going to discuss the acquisition of a stake in YukosSibneft by a major
U.S. oil company," a prominent investment banker said.
- He said the rumor is that Yukos' sale of a strategic
stake to Chevron would be announced at the St. Petersburg summit.
- But neither Yukos nor ChevronTexaco would comment on
what both companies called "market speculation."
- However, other investment bankers were very specific,
saying the price for the deal had already been agreed -- a staggering $18.6
billion for 25 percent plus one share, half in cash and half in ChevronTexaco
stock, which would be a huge premium over the combined market value of
- But with Yukos under fire from the Kremlin for its moves
to finance opposition parties amid a massive bout of infighting between
clans in the Kremlin itself, analysts said it seemed that most of the buzz
was coming from Yukos.
- "Yukos is pushing this, given that there is the
possibility of a renewed attack against the company during the election
campaign," said Christopher Weafer, chief strategist at Alfa Bank.
"Yukos is trying to bend a deal to suit its own purposes, for protection.
- "The attack on Yukos in July turned out to be hugely
popular with the electorate and they fear the Kremlin might launch something
again," Weafer said. Core Yukos shareholder Platon Lebedev was arrested
that month for allegedly stealing property in a 1994 privatization.
- Weafer said Yukos shareholders appeared to be trying
to play two U.S. oil majors, Chevron and ExxonMobil, off of each other
in a bid to push the deal along.
- "There is room for one more deal in the pipeline.
Getting a third [sale of a Russian oil company to a foreign company] approved
will be much more difficult," he said. Rival global oil giant BP's
recent $6.35 billion deal for a 50-50 partnership with Alfa and Access/Renova's
Tyumen Oil Co. boosted BP's global ranking and set off a race between other
global oil majors to be the next to clinch the next big deal in one of
the fastest-growing oil patches in the world.
- Executives from both Chevron and Exxon have been in Moscow
for months conducting due diligence studies on Yukos and Sibneft. One market
insider said "they are only here because the other one is here."
- Joseph Stanislaw, the president of the influential Washington-based
think tank Cambridge Energy Research Associates, said by telephone that
a race certainly seemed to have started for Russia's oil resources, especially
because Iraq, which has the world's second-largest reserves, is still in
- "For international oil majors to grow they have
to find brand new reserves. The only opportunities are in Russia, Kazakhstan
and parts of the Middle East," said Stanislaw, who is also visiting
Moscow. "Iraq is a potential opportunity, but nobody is sure when
they are going to be able to go in. If you're not the first and second
mover in Russia, you could lose an opportunity. In Iraq, there isn't even
a queue yet."
- But despite the Bush family's well-known ties with the
oil industry, some analysts said they doubted he would try and talk up
a deal with YukosSibneft.
- "He's on a retainer for Carlyle. He's not cheap
and he's not silly. He's here to launch a major investment fund,"
said James Fenkner, head of research at Troika Dialog.
- Analysts also questioned whether it would make any sense
for a big oil major to risk billions at a time when Russia seems to be
moving into a period of increasing political uncertainty.
- "Why a buyer would take a minority stake in YukosSibneft
before the elections and when the company is under pressure from the Kremlin
is beyond me," Fenkner said. "It would be a pretty darn aggressive
- Other sources with knowledge of Bush's visit, however,
said privately that Bush would use the visit precisely to help clarify
the uncertainty swirling around Yukos.
- Yukos chief Khodorkovsky has become a leading Russian
voice in the West in recent years. He was the first Russian oil baron to
send crude directly to the United States -- Texas to be exact -- and was
key in establishing high-level energy talks between both countries. He
has also tied himself to the Rothschilds, one of the West's most influential
banking families, and set up a fund -- the Open Russia Foundation -- to
promote ties between former Cold War foes. Influential U.S. foreign policy
guru Henry Kissinger sits on Open Russia's board, as does Lord Jacob Rothschild.
- Kissinger, coincidentally, is also currently in Moscow,
and will attend the Carlyle dinner.
- Bush last came to Moscow in June of 1998 -- just two
months before the economy imploded -- for the lavish opening of international
investment banking giant Goldman Sachs' office here.