Page 115 - RusRPTFeb19

The application by Schlumberger oil servicing major to acquire Russia's largest extraction services provider Eurasia Drilling Company (EDC) was not approved again, Kommersant daily reported on December 5 citing unnamed sources. Reportedly the main reason for the commission to shelve the application is the recent sharp deterioration of the relations between the US and Russia and the threat of new sanctions. However, the Federal Antimonopoly Service does not exclude that the deal will be reviewed by the end of this year on revised conditions. The deal saga has been running for several years as Schlumberger has been keen to buy EDC, but the Russian government is nervous about letting go of control over a strategically important company in a key sector and keeps blocking the deal. At the start of this year the deal looked like it was finally going forward again, but it has now got caught up in the recent flaring of tensions between Russia and the west. In the meantime Saudi investors have also been eyeing EDC and even announced some preliminary investment in autumn 2018. In July EDC announced the sale of a 51% stake to Schlumberger, making it the first major US acquisition in the Russian oil and gas sector since international sanctions were imposed in 2014 because of Russia's actions in Ukraine.
Antipinsky Oil Refinery, one of the largest independent refineries in Russia, has been shut down on December 5 due to oil supply shortages, Reuters and Vedomosti reported citing unnamed sources on December 10. Russia's largest bank Sberbank could throw a RUB23bn lifeline to Antipinsky, but the problems of the refinery could be a sign of a deeper crisis in the refining industry, which has been subject to much regulatory uncertainty and could be squeezed further by large state controlled players such as Rosneft under the government's drive to control retail fuel prices. Reportedly, Antipinsky did not get any oil since the beginning of December due to cash problems. New Stream owns another two refineries besides Antipinsky, which has the capacity of 9mn tonnes annually. The refinery made RUB89bn loss in 2017 and covered it by borrowing RUB117bn.
American oil firm Schlumberger is reportedly prepared to walk away from a deal to acquire shares of Russian firm Eurasia Drilling Co. (EDC) if Russian authorities don't signal intent to accept its offer in coming weeks, Vedomosti reported on January 21. This deal has been dragging on for years and got caught up in the Kremlin’s fight with Washington. A leading oil service company the Kremlin has been unhappy about handing over an important asset in a strategic sector to a US owned entity. While the commercial part of the deal was along ago settled, the political bit continues to bounce back and forth. It look like the deal was close to closing last year, but it has been stymied once again. Now Schlumberger says it has had enough: it will make one last attempt to close the acquisition and if it fails it will give up. Analysts believe it's unlikely this deal will close at present. As a general rule in the energy space (and many types of deals), the longer it takes to close, the less likely it is. What's most notable is that Schlumberger has already agreed to terms such as leaving its equipment behind if it was forced to sell off its shares due to sanctions.
9.2.3 Aviation corporate news
Russia’s top airline Aeroflot (includes Aeroflot, Rossiya, Aurora and Pobeda) carried almost 56mn passengers in 2018, the airline’s in-flight magazine said in its January edition. "Last year Aeroflot carried almost 56mn
115 RUSSIA Country Report February 2019 www.intellinews.com