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© RIA Novosti. Mikhail Fomichev

Sechin leaves Rosneft

by Ed BentleyTom Washington at 12/04/2011 14:22

 

Deputy Prime Minister Igor Sechin has stepped down as chairman of Rosneft two weeks after Dmitry Medvedev ordered government officials to leave state companies.

The oil company said he had decided “to set a good example” by promptly obeying the president’s orders, the Financial Times reported.

His resignation comes ahead of the expiration of the exclusivity period on Rosneft’s landmark deal with BP on Thursday and a crucial TNK-BP board meeting tomorrow that could shape the future of the pact.

As Russia’s oil tsar Sechin had played a major role in shaping the $16 billion share swap, and his resignation could weaken Rosneft’s position.

“It is an unfavourable factor for the ongoing negotiations,” said Valery Nesterov, an oil and gas analyst at Troika Dialog. “Sechin was the man who promoted this Rosneft deal. I don’t know to what extent it was his idea, but he participated actively.”

 

Same strategy

As the major shareholder the government remains firmly in control of Rosneft, and Sechin is likely to remain influential behind the scenes.

“Sechin remains deputy prime minister responsible for the sector, and he will push for a man he trusts,” said Nesterov. “There won’t be major strategy changes.”

VTB senior vice-president Sergei Shishin may replace the deputy prime minister on the Rosneft board, Itar Tass reported.

“The state can conduct its policies without Sechin in charge of the company,” said Artyom Konchin, an oil and gas analyst at Unicredit. “We saw today that one possible successor, Sergei Sishin, has KGB ties too. He is rumoured to be well connected in Sechin’s clique.”

Independent director Alexander Nekipelov will head the board until the annual shareholder meeting in June, but he is unlikely to stay in place after the election.

Alexei Kokin, an oil and gas analyst at Uralsib, said that while the current board “are very competent” they don’t have the experience to run a major international.

There must be consensus at the highest level that [the BP] deal must be done for Rosneft to break through into the global market,” he said.

 

Changing of the guard

Sechin is the first casualty of the 17 government officials that Medvedev said should resign from the boards of state-owned companies.

The president’s call for change was part of his modernisation drive to bring more business-friendly practices to state run companies, particularly those scheduled for privatisation.

“While the shuffle at the top adds a bit of uncertainty at the top of Rosneft, the changes also hold out the opportunity for a modest increase in transparency and improved decision-making from the addition of a new, independent director, depending upon who that person is, of course,” Citibank analysts wrote in a note to investors.

Despite claiming a high-profile casualty, Sechin’s fall is unlikely to lead to major changes in state-run companies despite an apparently growing election campaign around the issue.

“The situation in the board of state controlled companies won’t change in the next couple of years,” said Nesterov. “We’ll have to wait until the end of this cycle of elections, and many other things have to be done to improve transparency and other things investors want.”

 

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