Texts for Translation
  Business Article

The dangers of playing roulette with the Russians

I remember going to see Nicolas Berry, a scion of the family that once owned the Telegraph newspaper group, some six years ago. Berry had just returned from Russia where he had spent days trekking in sub-zero conditions to see an oil find in wests Siberia, owned by Sibir Energy, an AIM listed company.

He had drunk the vodka, kicked the drums and he was excited by the prospects. Berry had built a 20% stake in Sibir, whose interests include joint ventures with Shell and Sibneft, the oil giant controlled by Roman Abramovich.

Berry dug in for a long ride, but in recent months he and other Sibir investors became concerned. Henry Cameron, its chief executive, was not returning calls, and Berry and others have not been so fortunate. Last month, with little explanation, Sibir suspended its shares, and the reson is far from clear. It looks as if its 50% joint venture interest in the Priobskoye feild, which accounts for 20% of its assets, has been cancelled by Sibneft.

This could lead to a £100m writedown of its asset value. For a company with a market value of just under £500m this is not small beer.

British investors are not the only ones to have been left high and dry by sibneft's actions. So, too, has Chalva Tchigriniski, a Moscow businessman with close links to the city's mayor. Tchigriniski, who holds a 40% stake in Sibir, built a fortune from property and petrol retailing and on face value he should be livid by this action.

The situation highlights the dangers of investing in exploration firms, particularly Russian ones, where ownership can change overnight. When a shrewd investor like Berry sells out, the lights should flash.

Article by John Walpes, for The Times newspaper.