The Moscow Times
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
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
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.
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
"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.
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 the companies.
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
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
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 chaos.
"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
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
"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 play."
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.