NOVATEK in talks with VTB to buy Alrosa gas assets
MOSCOW. June 20 (Interfax) - NOVATEK is in talks to purchase the gas assets of Alrosa : Urengoi Gas Company LLC (Novy Urengoi) and Geotransgaz (Urengoi), Kommersant reported, citing sources familiar with the situation.
A NOVATEK representative confirmed the talks to Interfax, adding that the properties are located in a region where the company operates close to transportation infrastructure.
NOVATEK CEO Leonid Mikhelson sent a proposal to VTB chief Andrei Kostin on June 14 offering to pay $160 million for 90% of Urengoi Gas Company, Kommersant said. Mikhelson said the price was subject to adjustment depending on the size of net debt and "other factors" identified during a detailed check of the company, the newspaper said, adding that the offer is valid until July 15. NOVATEK is also interested in Geotransgaz, but the talks on that asset have not been completed yet and no offer has been formulated.
VTB purchased the assets from Alrosa in 2009 for $620 million.
Since then, $135 million has been invested in the projects and another $145 million in interest has been paid. Alrosa is obligated to buy the companies back from VTB Capital in October 2012 for $1.2 billion. "From the moment the deal was concluded it was assumed that VTB would launch an intensive search for a buyer," the source said. Alrosa had spent the previous two years looking for a buyer for the gas assets on its own, and NOVATEK was named as one contender. Itera and Gazprombank were also interested.
VTB Capital wants to sell the two assets simultaneously, a source close to the deal told Kommersant. Alrosa declined to comment on the report.
Geotransgaz holds the license to develop a portion of the Beregovoye field, including the Yuzhno-Geologicheskaya section. Reserves total 107 billion cubic meters (bcm) of gas and 17 million tonnes of condensate. Sibneftegaz, in which NOVATEK owns 51%, also holds a license to exploration and production at Beregovoye. Geotransgaz may commence production in 2014. Once that occurs, Alrosa believes Geotransgaz will be worth 15 billion rubles, with EBITDA equal to 6 billion rubles, and the project is expected to recoup investment - 7.3 billion rubles before 2014 - within four years.
Urengoi Gas Company owns the license to geologically explore Ust-Yamsoveiksy section. Reserves total 94 bcm of gas and 10 million tonnes of condensate.
RTS$#&: ALRS, ITER, NVTK, VTBR
