Nikolai Tokarev, the president of Transneft, Russia’s state oil pipeline monopoly, rarely gives interviews let alone criticizes the company’s business partners in public. So it’s puzzling to see the former KGB officer airing complaints about the Summa Group, Transneft’s co-shareholder at Novorossiysk Commercial Sea port, Russia’s biggest stevedoring company.
Transneft has appeared to get on well with Summa, the oil, telecoms, construction and logistics group controlled by the Dagestan-born Russian businessman Ziyavudin Magemedov, since the two companies teamed up two years ago to take a stake of 50 per cent plus one share in NCSP.
However, conflict between the two has been simmering for some time, according to Tokarev. “We are very different companies,” he told the Russian business daily Kommersant in an interview published on Monday. “Our priorities frequently do not coincide.”
So what’s gone wrong?
For a start, Transneft has accused Summa of repeatedly ignoring its interests as a shareholder at NCSP and has demanded a change in management at the ports company. In a letter to Magemedov, a copy of which was obtained by Kommersant, Tokarev called for an urgent meeting of NCSP directors to discuss the appointment of a new board.
When talking to Kommersant, Tokarev did not mention the letter and it was not clear who had leaked the document to the newspaper. However, he said Summa had caused offense by trying to install its allies at NCSP subsidiaries . “We are equal partners,” he said. “We do not intend to be in the position of some kind of looker on.”
In a further sign of a power struggle, Tokarev said he was concerned that Summa might be angling to gain control of the government’s 20 per cent stake in NCSP that is slated for privatisation. Tokarev admitted he had backed a proposal by Igor Sechin last year that would have seen Rosneft, the state oil company, take control of the government’s NCSP stake – hardly a privatisation but better, from his point of view, than having Summa lording it over Transneft at the ports company.
“We would not be able to deal with difficult issues or control the situation on the board. Yet again, we’d have to pull up a chair to the edge of the table,” he said.
Transneft and Summa are not only embroiled in a power struggle. They have commercial disagreements as well. Tokarev told Kommersant, for example, that Summa had expected to provide low-cost logistics services at an oil storage terminal the group plans to build at Rotterdam port to serve as a trading hub for Russian oil.
In yet another sign of a falling out, Tokarev said that Transneft had created its own construction division and would in future rely on its own resources when building new pipelines. Outside contractors of the likes of Summa would only be hired for a few technically complicated projects.
Summa declined to comment on the Tokarev interview.
Industry sources said NCSP, which reported record cargo loadings of 151m tonnes in 2012, including more than 110m tonnes of crude oil, was in good operational shape and earning decent returns for shareholders.
Tokarev’s decision to go public with his complaints about Summa coincides with information surfacing elsewhere in the Russian press on Monday. A profile of the Transneft boss published by Vedomosti, the FT’s sister newspaper in Russia, described how Tokarev befriended fellow KGB officer Vladimir Putin in east Germany in the 1980s and rose to head the state oil pipeline company after his protégé became Russian president.
It’s possible that there are political reasons for the scrap linked to the recent change of leadership in Dagestan. Putin accepted the resignation of Magomedsalam Magomedov, the president of Dagestan, on January 28, signaling Kremlin concern about a rising insurgency and political rivalries in the region.
It could be a coincidence, but the following week Putin stripped Akhmed Bilalov of the post of vice president of the Russian Olympic Committee, accusing the Dagestan-born businessman of failing to control the sky-rocketing costs of building sporting facilities at Sochi, where Russia will host the 2014 Winter Games.
Bilalov is so far the only one of six vice presidents of the Olympic Committee to lose their jobs since the Kremlin revealed huge cost overruns at Sochi. Supporters say he has been used as a scapegoat. Ziyavudin Magemedov is a cousin of Bilalov’s. Although Summa says the two men have no joint business interests, Bilalov’s fall from grace could signal trouble for Magemedov, according to political analysts.
Nikolai Petrov, scholar in residence at the Moscow Carnegie Center, said the change of leadership in Dagestan could have triggered a rebalancing of interest between business clans from the republic.
“The balance between these businessmen is so complicated that a single move against one of them can cause a rapid chain reaction,” he said. “Perhaps we are seeing fragments of the same puzzle.”
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