Abramovich eyes £5.2bn oil deal

RUSSIAN billionaire and Chelsea FC owner Roman Abramovich could pocket $10bn (£5.2bn) later this year as Western supermajors line up to buy into his oil business, Sibneft.

Analysts believe a deal could be struck over the next six months after it emerged today that the oligarch, Britain's richest man, is in talks to sell half his shares in the group he took over in the late 1990s.

Sibneft is desperate to disentangle itself from last year's agreed merger with Yukos, given the Kremlin's escalating investigations into the business and its former chief Mikhail Khodorkovsky.

Shell, Total, ChevronTexaco and Exxon are believed to have held talks with Abramovich's advisers over buying some of his stock once the merger is annulled. If this happens, Abramovich would regain control of the 92% stake in Sibneft he held alongside business partner Eugene Shivdler and other former executives.

Sibneft's market value is $15bn but analysts believe fair value is closer to $22bn given growth prospects and Western companies' desire to break into Russia.

Stephen O'Sullivan, an analyst at Moscow-based United Financial Group, said: 'Nobody is going to forgo the chance to have discussions with Sibneft and make sure their hat is in the ring. Exxon has always been linked with Yukos but they must be thinking, 'What if the Russian government won't allow a deal with Yukos?'. Sibneft is the next natural choice.'

BP led the way among the supermajors by striking a joint venture with TNK. The group is likely to become the third-largest player in the Russian market during 2004. Russia overtook Saudi Arabia at the end of last year to become the largest crude producing nation and Sibneft has aggressive plans to boost production 20% this year.

Abramovich has realised a host of Russian assets, including a stake in airline Aeroflot and a chunk of aluminium producer Rusal.

City analysts said Shell was unlikely to be in the front line for Sibneft given the controversy surrounding its reserves debacle.

A Sibneft spokesman said: 'We can't comment on market rumours. We are focused on completing the demerger and increasing output.'

BP may invest $3bn in the development of the sprawling Sakhalin-5 offshore project in Russia, its partner in the venture Rosneft said today. It is thought to hold up to 5.7 billion barrels of crude.