Alrosa considers bringing in Russian and foreign investors for gas assets
MOSCOW. Oct 7 (Interfax) - Diamond producer AK Alrosa , which earlier this week announced that it plans to buy back gas assets from VTB Capital, is mulling the option of bringing into Russian and foreign investors with experience in the gas sector for these assets, the company's vice president and CFO Igor Kulichik told journalists.
When asked about Alrosa's options for working with the gas assets, Kulichik said that Alrosa plans to develop both companies. "We're planning to develop them since in terms of licenses, they aren't very interesting".
Alrosa's plans for the gas assets (CJSC Geotransgaz and LLC Urengoi Gas Company) are similar to those for the Timir railway project, 51% in which Alrosa is selling to Evraz, Kulichik said. "We will repeat the experience with the rail assets. [We will] bring in a partner with 51%, one of the gas players," he said.
Kulichik valued total investment in the gas assets before the start of production at around 12 billion rubles. "This isn't a lot of investment. For the whole period prior to launch, it comes to around 12 billion rubles. This isn't a global project or a lot of money," Kulichik said. The enterprises will sell $300 million-$400 million a year.
Kulichik characterized both gas companies as promising enterprises in terms of production and added that gas production at one of the companies might start in the company weeks.
Commenting on possible investors, he cited a roster of Russian oil and gas companies such as Novatek , Itera and Gazprom , as well as Inter RAO. "There are also foreign investors but this is a political issue. It depends on who the commission on investment in strategic sectors allows in," Kulichik said.
Russian electricity holding OJSC Inter RAO UES told it is ready to consider joining the project. "If they make us an offer we're ready to look at it," an Inter RAO spokesperson said.
Inter RAO's strategy, in addition to the development of electricity generation assets, also foresees the development of heat supply. The holding was earlier in negotiations for buying a stake in Northgas (49%) from businessman Farkhad Akhmedov. However, this transaction did not go through.
The gas assets Alrosa plans to buy back might be interesting for Inter RAO since the holding controls OGK-1 with generating capacity in the Yamalo-Nenets Autonomous District (Urengoi GRES with 24 megawatts capacity).
The fund British Empire Special Situations, which is part of the British Empire Fund, was been reported to have offered $1 billion-$1.3 billion for Alrosa's gas assets. Steven Clark Rockefeller Jr. organized the fund's financing.
Geotransgaz and Urengoi Gas Company develop and produce gas and condensate at the Beregovoye and Ust-Yamsoveiskoye licensed deposits in the Yamalo-Nenets Autonomous District. According to a reserve audit conducted by DeGolyer & MacNaughton in mid-2011, total proven and probably reserves for both companies come to over 140 billion cubic meters of natural gas and 20 million tonnes of condensate (combined, this is 1 billion barrels of oil equivalent).