OREANDA-NEWS. September 08, 2009. AFK Sistema, the new owner of Bashkortostan oil and petrochemical companies (informally “BashTEK”), is to change the business model at four refineries to increase profitability, reported the press-centre of Investfunds.

According to the new strategy, the BashTEK crude oil producer, Bashneft, will buy extra crude oil from other oil majors and then process it at the refineries, making Bashneft the BashTEK profit-center.

The new arrangement boosts Bashneft cash flows, making its prefs a very interesting dividend play (according to our conservative estimates, interim dividend yield for 9M 2009 could be 15% per pref). We also see possibility that BashTEK could be an M&A target for Lukoil, which will probably supply much of crude inputs to the refineries, but only in the long-term, after Sistema has added value by transformation of BashTEK into a new VIC.