Gazprom and Novatek completed the transaction on Gazprom’s acquisition of a 100% stake of Purgazdobycha – the Zapadno-Tarkosalinskoye field development licensee.

The deal stipulated exchange of assets between Gazprom and Novatek. As a result, Novatek purchased the Zapsibgazprom-owned Purneftegazgeologia’s 8.34% of shares. Gazprom, in its turn, acquired from Novatek a Purgazdobycha 100% stake, authorizing Noyabrskgazdobycha to develop the Zapadno-Tarkosalinskoye field.

Metropol Investment Financial Company acted as financial advisor on Gazprom’s transaction.

“The deal has been executed on market-based principles meeting Gazprom and Novatek’s interests. The asset exchange serves as a vivid example of efficient and mutually beneficial cooperation between Gazprom and independent gas producers. On obtaining control over the Zapadno-Tarkosalinskoye field, Gazprom has received additional opportunities to attract investments into the project and increase its efficiency,” – stated Andrey Kruglov, Deputy Chairman of Gazprom’s Management Committee.

Reference:

Starting 1993, the Zapadno-Tarkosalinskoye field license has been held by Purneftegazgeologia – a Novatek subsidiary.

Purneftegazgeologia and Noyabrskgazdobycha, a Gazprom subsidiary, entered into an agreement empowering the latter to produce gas from the field, with 90% of the gas extracted from the Cenomanian deposits owned by Noyabrskgazdobycha and 10%, by Purneftegazgeologia. In 2003, gas production at the Zapadno-Tarkosalinskoye field accounted for 15.1 bcm (Purneftegazgeologia’s share inclusive).

However, under a new Tax Code taking effect in 2002, only the official field development licensee can have ownership rights for the feedstock produced from any field and be Natural Resources Production Tax (NRPT) liable. Due to the aforementioned, Gazprom and Novatek faced the need to enter into a new agreement.

In December 2003, Gazprom and Novatek agreed that, to resolve the existing problem, Purneftegazgeologia will found the Purgazdobycha subsidiary (incorporated on 15 December 2003) to be registered (done on 30 January 2004) as the Zapadno-Tarkosalinskoye field development licensee.

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