Putin ally alleges ‘management failure’ at Dublin oil explorer Petroneft

A former member of parliament for Vladimir Putin's United Russia party, who wants to overthrow the board of Dublin-headquartered exploration firm Petroneft Resources, has alleged a "management failure" because he claims it has not fulfilled the potential of its main asset in Siberia.

Maxim Korobov, whose Natlata firm is Petroneft's largest shareholder with almost 15 per cent, flew to Dublin yesterday as part of a drive for support for his campaign against the board, resulting in an egm to be held in Dublin next month.

Mr Korobov, an ally of the Russian president Mr Putin, wants shareholders to oust five members of Petroneft's board, including its Dublin-based chief financial officer, Paul Dowling.

To trawl
He also wants shareholders to order independent accountants to trawl Petroneft's books to identify "inefficiencies", and to halt a planned farmdown to an international oil major of 50 per cent of Petroneft's Siberian asset, known as Licence 61. He wants instead to be allowed buy out a Petroneft loan held by Macquarie bank, which he would then convert to equity, as well as to underwrite a $10 million rights issue, which would give him overall control of the company. Petroneft has asked shareholders to reject his proposals, and has accused him of trying to gain control of Petroneft on the cheap. It has asked shareholders to vote against all of his egm resolutions, and says it will pursue the farmdown.

Diverge
Mr Korobov said he first invested in Petroneft in 2007, but grew disillusioned with it three years later when, he claims, the company's operational guidance on production began to diverge from what it could deliver.

“From about 2010, the board’s promises became disconnected from reality,” he said. He blamed management’s alleged failure to deliver on its production promises for a collapse in Petroneft’s share price from 73p per share in 2011 to about 5.5p now.

He also heavily criticised management because he claimed it had not conducted any 3D seismic studies before drilling at the prospect. Mr Korobov also criticised the company because the company’s main drilling contractor is co-owned by one of Petroneft’s directors.

“We want to study this issue. It looks like bad governance,” he said.

Mr Korobov denied that he would change Petroneft’s Irish domicile if he were to gain control.Petroneft declined to comment, but a circular it sent tyo shareholders last week rejected all of Mr Korobov’s allegations in detail.