The winner of Volgotanker's April tender for an international managing agent should increase the firm's export volume by up to 15 percent, a senior Volgotanker official told The Russia Journal.

Volgotanker, the Samara-based tanker and barge operator, called for bids to manage its oil export transportation and chartering business. Domestic agents Navitank, Argomar, and TTT-Servis tendered, but according to Ilya Katsnelson, Volgotanker's directors decided to appoint the Denmark-registered agency, Volgotanker Marine Service A/S, a fully owned subsidiary of the shipping company.

By keeping the cashflow within the group but offshore, Volgotanker expects to improve its appeal to foreign lenders who insist on security for loans outside Russia. New loans will be required next year to finance Volgotanker's ambitious shipbuilding program, Katsnelson said.

He said Volgotanker Marine Service "will get the part of Volgotanker's operations directly linked to exports. That is 90 percent of the company's business. We expect this will increase the volume of transportation up to 15 percent. In the longer run, this will also enable us to attract large-scale investment into the company. This would be practically impossible for Volgotanker as a Russian company."

International clients of Volgotanker's fleet for transporting oil and products in Europe will benefit from the new agency, Katsnelson said, because they "will get a single contract and a single tariff for transportation from Samara to St. Petersburg instead of signing different contracts with several tanker companies."

Volgotanker, according to company records, currently operates 320 vessels; 178 of them tankers of the river-sea type for oil and oil-products transportation. The company estimates that one barrel of Russian crude out of every eight exported worldwide is carried by Volgotanker.

Volgotanker is currently trying to retrieve 16 of its tankers in an arbitration proceeding under way in London. The operating right is disputed by Burren Energy Shipping and Transportation (Best), an affiliate of the ING Bank group, which has been operating the vessels on a 15-year bareboat charter.

According to Best's London legal representative, Stephen Kirkpatrick of Richards Butler, the arbitration began at the end of last year. He said the proceeding's confidentiality rules precluded his commenting on Volgotanker's claim.

Alexander Alexandrovich, chief executive and board chairman of Volgotanker, said: "The former management of Volgotanker decided to transfer 16 vessels to Best on bareboat charter terms for a period of 15 years, which in turn transferred them to Best-Samara." Volgotanker officials say the vessels are currently being operated on Caspian Sea and internal Russian river routes.

Best was controlled by Barings Vostok, one of the Russian units of Barings Bank, before it was acquired by ING. In 1999, according to Volgotanker, Barings Vostok sold its 36 percent shareholding in Volgotanker to the Yukos Oil Company.

That sale was triggered after opposition from the Samara region government to Barings Vostok's plan to restructure Volgotanker into two companies, and reflag its most profitable vessels offshore.

Although the Samara region opposed the restructuring, it approved the transfer of the tankers to Barings Vostok's affiliate Best.

Best is claiming the tanker transfer was part of Barings Vostok's share sale deal. But according to a senior executive of Volgotanker, "we are not aware that one was related to the other."

"We make the distinction between the ING Barings group which has a perfect business reputation and Best," Alexandrovich said. "We do not exactly know the relationship between the two. We maintain that the way Best has acted is not in the best interests of the shareholders, including ING."

Through Barings Vostok, the ING group retains a 12 percent stake in Volgotanker.