Petroneft review explores sale of Russian oil asset

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Irish oil and gas explorer Petroneft is exploring the sale of an oil-producing asset in Russia.

The company told the market yesterday that it was "examining a number of options in relation to maximising shareholder value".

"This process is at a very early stage and there is no certainty that any transaction will be completed. Further announcements will be made in the event of a material development," Petroneft said.

The company moved to clarify the matter after a report in Russian newspaper 'Kommersant' that the asset sale was being explored. The asset in question is known as Licence 61 and is 50pc owned by Petroneft, with the other 50pc being owned by Oil India.

In full year results for 2017, Petroneft said the licence had produced an average of 2,237 barrels of oil per day (bopd). This was a drop on the prior year but Petroneft said it was ahead of expectations.

The company was previously the subject of a boardroom battle as largest shareholder Natlata clashed with management over the direction of the business.

Eventually an agreement was reached which saw Natlata's ultimate beneficial owner Maxim Korobov join the Petroneft board.

Mr Korobov is a former member of the Russian parliament for Vladimir Putin's United Russia party. He is also a former Russian soldier who was wounded in the Soviet-Afghan War.

Oil prices steadied yesterday, but did not recover from sharp losses in the previous session despite the International Energy Agency's (IEA) warning that the world's oil supply cushion "might be stretched to the limit" due to production losses.

"The market was still nervous," said Phil Flynn, an analyst at Price Futures group.

After US crude briefly traded above $71 a barrel, traders exited positions, leading the market lower to test below $70 a barrel, he said.

The announcement that Libya's National Oil Corporation would reopen four oil export terminals, ending a standoff that had shut down most of Libya's oil output, was a key catalyst for a dramatic sell-off on Wednesday, analysts said.

The reopening will allow the return of up to 850,000 barrels per day of high-quality crude oil to markets.