Transneft to withdraw from Novorossiysk?

News 12 Oct 2016 by WCN Editorial

Transneft, Russia’s state-owned oil company, is understood to be on the point of selling its 35.5% stake in Russia’s largest sea port

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Transneft holds a a 35.5% stake in Novorossiysk Commercial Seaport (NMTP), which runs Russia's largest sea port and is an operator as well as the landlord.

Transneft and privately-owned Summa Group together own a 50% stake in NMTP, and Transneft has a separate 10.5% stake, bringing its total stake to 35.5%. NMTP’s remaining shares are divided between the Russian Federal Property Agency (20% – still to be privatised), Russian Railway (RZD)’s affiliates (5.3%), other minor stockholders and free float. In the current fluid market situation, estimates for the value of Tranneft's stake vary wildly between US$0.5B and US%1.2B.

Transneft’s Board Chairman and President Nikolay Tokarev recently approached Russian President Vladimir Putin with a request to allow Transneft to withdraw from Russia's strategic Black Sea port. The President's Office referred the matter to government ministries.

Energy Minister Aleksandr Novak has backed Transneft’s position, although at the time of writing the Transport Ministry has not yet voiced an opinion. All the same, the Russian Fund of Direct Investment has reportedly been ordered to find an investor ready to buy out Transneft’s stake. The Fund’s joint venture with the global port operator DP World, set up earlier this year with the aim of investing up to US$2B in Russia’s transport infrastructure, has reportedly shown its interest in acquiring the stake.

It is not clear why Transneft wants to sell up, but it has clashed with Summa on NMTP’s development strategy several times in the past. However, the parties seemed to come to terms last year. Indeed, earlier this year, Transneft was on the point of increasing its stake in NMTP to 40.8% by exchange its railway assets in the Russian Far East (RFE) for RZD’s 5.3% stake. However, the deal never took place, probably because of additional funds RZD would have needed to invest to adapt the RFE assets to meet its requirements.

Last year, NMTP Group handled 139.7 Mt, around 20% of the aggregate handling volume of all Russian seaports.