Sibir to sue Sibneft over oil stake

Sibir Energy, the oil minnow, is joining forces with a company chaired by Moscow's mayor to sue Roman Abramovich's Sibneft in international courts, alleging Sibneft cheated it out of an oilfield stake that experts value at as much as Dollars 1.5bn.

Sibir, listed on London's Alternative Investment Market but with its assets in Russia, claims Sibneft diluted its 50 per cent stake in a joint venture between the two companies to less than 1 per cent, through a share issue Sibir was never told about.

The venture, Sibneft Yugra, is developing the South Priobskoye oilfields in western Siberia, which analysts say could be worth Dollars 3bn. Sibir is itself facing legal action from a mysterious minority shareholder, Harley Street Capital, blaming it for destroying value by allowing the huge dilution of its interest in the field.

Henry Cameron, Sibir chief executive, told a Moscow press conference yesterday that Sibir became aware of the dilution only last year, 18 months after it had happened. Having unsuccessfully taken legal action in Russia, it planned to broaden its approach.

"We are pursuing the recovery of our assets from Sibneft both in Russia, and we intend very soon to institute proceedings elsewhere in the world," he said.

Sibneft's actions, he added, constituted "unfair predatory action designed to destabilise Sibir so that it would actually dispose of its assets at less than market value".

Sibir is being joined in the legal action by the Moscow Oil and Gas Company, a Moscow city-controlled joint venture to provide stable fuel supplies to the Russian capital chaired by Moscow mayor Yuri Luzhkov.

Sibneft has repeatedly said Sibir was compensated for the dilution, although Mr Cameron said Sibir was unaware of any compensation.

John Mann, a Sibneft spokesman, yesterday denied the company had acted improperly.

"Sibneft has operated, with respect to Sibneft Yugra, completely within the boundaries of broader agreements covering many different projects between our shareholders and the majority shareholders of Sibir," he said. "We acted within the law. We financed this venture completely," he added.

"(Sibir) are very aware that any court that has reviewed the full facts of this case has ruled in our favour."

Dmitry Afanasiev, Sibir's legal counsel, citing rumours Mr Abramovich was in talks to sell his controlling Sibneft stake, said any buyer should be aware of the potential legal risk. Sibneft called the reports about Mr Abramovich's plans "pure conjecture".