Rosneft Names Khudainatov Chief Executive as Putin Deputy Boosts Control
OAO Rosneft named Eduard Khudainatov as chief executive officer, ending the almost 12-year tenure of Sergei Bogdanchikov and increasing Deputy Prime Minister Igor Sechin’s control of Russia’s biggest oil producer.
The board, chaired by Sechin, appointed Khudainatov to the post effective today, Moscow-based Rosneft said in a statement yesterday. The announcement came a day after Russian President Dmitry Medvedev proposed that Khudainatov, the company’s deputy CEO, be put forward for the top job.
Rosneft, with Bogdanchikov as CEO and Sechin as board chair, became Russia’s largest oil producer by purchasing the production and refining assets of Mikhail Khodorkovsky’s Yukos Oil Co., which was broken up and sold to recover more than $30 billion in back taxes. Bogdanchikov’s ouster further cements the authority of Sechin, who has carried out Prime Minister Vladimir Putin’s strategy of increasing state power over the oil and gas industry.
“Sechin gains greater control with the move, as Bogdanchikov’s long tenure had given him large sway within the company and at the highest levels of government,” Maria Radina, an oil and gas analyst at Nomura Holdings Inc., said by telephone from Moscow.
No reason was given in the statement for the removal of Bogdanchikov, 53, who ran Rosneft since 1998. Bogdanchikov said on Sept. 1 that he had no plans to leave the company, after the Vedomosti newspaper reported earlier that day that he might resign. His three-year employment contract was automatically extended for one year when it expired in June, the Interfax news service said at the time.
Khudainatov’s contract runs for three years, Rosneft said. He joined Rosneft in September 2008 and as first vice president for production and strategic projects was in charge of bringing on stream the northern Vankor field, Russia’s largest new oil development. At peak, Vankor may produce 500,000 barrels of oil a day, equivalent to 5 percent of current Russian output.
Prior to joining Rosneft, Khudainatov, 49, served as a general director at Severneftegazprom, OAO Gazprom’s license- holder to the Yuzhno-Russkoye field in Siberia, which will supply gas directly to Germany via the Nord Stream pipeline. E.ON AG holds 25 percent of the field. Medvedev was chairman of Gazprom during Khudainatov’s tenure at the unit.
Khudainatov has also held “leading positions” in the Russian government, including the presidential executive office, Rosneft said in the statement.
“Khudainatov seems to be the most reasonable of the candidates previously discussed by the press: in addition to his experience in the oil and gas sector, he has good relations with Igor Sechin, which may be useful to Rosneft in the future,” Pavel Sorokin, an analyst at Alfa Bank in Moscow, said today in a note.
Sechin said in the statement that Khudainatov will lead Rosneft in its “next stage of development.” The deputy prime minister was on vacation and unavailable to comment further, said Sechin’s aide, who declined to be identified citing state policy. Rosneft spokesman Nikolai Manvelov declined to comment on the reason for Bogdanchikov’s replacement.
Rosneft, which last month settled more than 12.9 billion rubles ($420 million) of debts to Yukos Capital, run by former Yukos management, is looking to expand overseas with a venture with Crescent Petroleum Co. to drill for gas in the sheikhdom of Sharjah in the United Arab Emirates. It’s also part of the Consorcio Ruso venture with Russia’s other four largest crude producers to develop heavy oil deposits in Venezuela.
The resolution of “persistent speculation” about Bogdanchikov’s future at Rosneft may remove doubts that have weighed on its share price and clear the way for new initiatives, Chris Weafer, chief strategist at UralSib Financial Corp., said by e-mail.
Rosneft rose as much as 1.6 percent today before paring gains to close little changed at 202.60 rubles in Moscow. The shares have lost 20 percent this year and are little changed from their 2006 initial public offering price.
The state is seeking to give deputy prime ministers greater control over companies, said Nikolai Petrov, an analyst at the Carnegie Moscow Center, in a phone interview.
“There has been some speculation that Bogdanchikov may become Russia’s energy minister,” Petrov said. “It is now unlikely judging by the way this whole thing played out.”