George Bush Sr In Russia On Carlyle Business Bush Sr, Kissinger, Giuliani, Brzezinski, d'Estaing In
Leningrad The Moscow
Times 9-15-3
- He may be retired from public life but George Bush
seems to cause a stir every time he comes to Russia.
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- 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?
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- 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.
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- 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.
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- 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.
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- 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.
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- "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.
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- 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.
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- Yukos shares jumped more than 4 percent on the news in
early trading Thursday.
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- "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.
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- He said the rumor is that Yukos' sale of a strategic
stake to Chevron would be announced at the St. Petersburg summit.
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- But neither Yukos nor ChevronTexaco would comment on
what both companies called "market speculation."
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- 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.
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- 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.
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- "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.
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- "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.
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- "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."
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- 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.
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- "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.
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- 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 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.
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- 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.
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- 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.
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- http://newsfromrussia.com/main/2003/09/12/49940.html
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