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The Moscow Times: Probe Hits Volga Gas Listing

Monday, April 23, 2007. Issue 3642. Page 7.
Reuters

Small gas firm Volga Gas on Friday raised $125 million in its initial public offering in London, pricing its shares at $6, at the bottom of the range.

The offering on London’s AIM alternative market valued the company at $310 million after the issue and at $195 million before it.

Market sources said Volga Gas, which placed 20.83 million shares to have around 40 percent of its stock freely traded, was seeking a valuation of $180 million to $240 million prior to the new share issue.

Analysts said the IPO was poorly timed by Volga Gas because it coincided with a surprise attack by the outspoken deputy head of the Natural Resources Ministry’s environmental watchdog, Oleg Mitvol, on the company’s peers.

Mitvol last week called on the government to revoke operating licenses from mid-sized oil firm Imperial Energy and stop oil flowing through a newly built pipeline because it might have broken environmental guidelines.

He also said he would seek an investigation of how Imperial and other small companies booked their reserves, saying firms that floated stock abroad from 2003 to 2007 had overstated their reserves.

He said the firms in question were Sibir Energy, Urals Energy, Victoria Oil and Gas, gas firm Novatek and gold firms Trans-Siberian Gold, Highland Gold and Celtic Resources.
 
“The reserves scandal will have a knock-on effect on most of the junior oil and gas names on the market, as well as on newcomers,” Deutsche UFG brokerage said in a note.

Analysts at UBS said Mitvol’s attack on Imperial Energy might signal that it had become an acquisition target by a larger company. They also said the statement followed Mitvol’s general pattern of increasing pressure on Russian independent oil and gas firms.

Last year Mitvol led an environmental campaign against Shell’s project off Sakhalin, which culminated in an acquisition of half the project by Gazprom.

The takeover of the huge Sakhalin project helped the Kremlin further strengthen its grip over the energy sector and almost fully eliminate large-scale projects under foreign leadership.

Industry insiders say the Kremlin may soon turn its attention to mid-sized and small energy firms, which may ultimately end up under control of state firms.

http://www.themoscowtimes.com/stories/2007/04/23/043.html

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