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Rosneft’s deal to purchase ALROSA’s gas assets may be closed within weeks

September 14, 2013, 22:51 UTC+3

"It will be closed shortly," Rosneft President Igor Sechin said

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Photo ITAR-TASS / press-service of "NK" Rosneft "

Photo ITAR-TASS / press-service of "NK" Rosneft "

SOCHI, September 14 (Itar-Tass) - Russia’s state-owned oil company Rosneft may close its deal to purchase the diamond producer ALROSA’s gas assets within the next several weeks.

“It will be closed shortly,” Rosneft President Igor Sechin said on Saturday, September 14.

Earlier, the Federal Antimonopoly Service upheld a request filed by TNK-BP, in which Rosneft has a 95 percent stake, for the acquisition of 100 percent of shares in Geotransgaz and Urengoy Gas Company.

Experts believe that the purchase of the gas producing subsidiary from ALROSA will give an additional synergy effect for the assets already taken over by Rosneft after the acquisition of Itera because Geotransgaz holds the license for the development of a part of the onshore Beregovoye gas condensate field in the Yamalo-Nenets Autonomous Area (located in the centre of Russia’s Far North), where Itera operates as well.

The sides started negotiations last year when the document on the purchase by the oil company of all natural gas produced by Geotransgaz was signed. It provides for the supply of 7 billion cubic metres of natural gas until 2015. However the purchase of ALROSA’s gas assets was postponed for a year because of Rosneft’s plans to acquire new large assets, which entailed heavy borrowing.

ALROSA President Fyodor Andreyev said his company was planning to close the deal with Rosneft by the end of the year. It wants to get rid of non-core operations, including 1.15 billion U.S. dollar gas assets, before the end of this year and ahead of the announced IPO.

ALROSA consolidated its interest in Geotransgaz and Urengoy Gas Company in March 2012, paying 1.037 billion U.S. dollars for the shares.

The latter two companies hold licenses for exploration and production of hydrocarbons at the Beregovoye and Ust-Yamsoveiskoye license blocks in the Yamalo-Nenets Autonomous Area. Jointly they are believed to contain 187 billion cubic metres of gas and 26.4 million tonnes of gas condensate.

The assessment of their investment potential suggests that they can produce up to 6 billion cubic metres of gas and 1.2 million tonnes of gas condensate a year at the peak of their activity.

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