Russia's energy grip tightening

LONDON - Gazprom, the world's biggest natural gas producer, is close to an accord to borrow US$10 billion ($14.2 billion) to buy control of Russian oil producer Sibneft from billionaire Roman Abramovich, bankers involved in the talks said.

ABN Amro Holding and Dresdner Kleinwort Wasserstein are negotiating loans and bonds for state-controlled Gazprom, sources said.

President Vladimir Putin is tightening his grip on Russia's energy industry, creating state-run companies big enough to compete with Exxon Mobil and BP. Putin said last month he was aware Gazprom had held talks with Sibneft shareholders.

"This is the next step toward state domination of the energy sector," said Roland Nash at Renaissance Capital investment bank in Moscow.

Gazprom, which supplies about a quarter of Europe's gas, is expanding into oil after the Government raised its stake to a majority in June.

That came six months after Rosneft snapped up Yuganskneftegaz to become almost as large as Chevron, the second-largest US oil producer. Yugansk was the biggest production unit of Yukos Oil, which was dismantled by Putin's Government during the past two years.

Abramovich, whose holdings include London's Chelsea soccer club, overtook Yukos owner Mikhail Khodorkovsky last year as Russia's richest man. Khodorkovsky was arrested on fraud and tax charges in October 2003. He was sentenced in May to nine years in prison.

- BLOOMBERG