OJSC ALROSA and Rosneft Oil Company have signed an agreement for the sale of ALROSA’s gas assets, consisting of the companies operating in the Yamalo-Nenets Autonomous District and the Republic of Sakha (Yakutia).
The official signing ceremony took place on September 27 in the presence of the Prime Minister of the Russian Federation Dmitry Medvedev in the framework of the XII International Investment Forum in Sochi. The document was signed by the President of ALROSA Fedor Andreev and President and Chairman of the Management Board of Rosneft Igor Sechin.
Total transaction value is estimated at $1.38 billion. The extractable reserves of ALROSA’s gas assets exceed 200 bln. cubic meters of natural gas and 40 mln. tons of liquid hydrocarbons, under the Russian reserves classification.
OJSC ALROSA plans to use the transaction proceeds to repay the Group’s outstanding debt.
“The decision to sell the gas assets was made in pursuance of ALROSA Group’s strategy which focuses on boosting diamond production capacities and gradual divestiture of non-core assets. Rosneft Oil Company has enormous expertise in oil and gas field development and already has practical experience working with Urengoy-based gas companies. We believe that the arrival of Rosneft, as a new shareholder, would give a boost to further development of ALROSA’s oil and gas assets in the Yamalo-Nenets Autonomous District and Western Yakutia”, said Fedor Andreev, President of ALROSA.
“Gas business development is one of Rosneft’s strategic priorities and acquisition of ALROSA’s oil and gas assets is perfectly in line with this strategy. It would also strengthen the positions of Rosneft in the Russian Far East – a region of great significance to the Company”, Rosneft President and Chairman of the Management Board Igor Sechin said.
The completion of the acquisition by Rosneft of ALROSA’s gas assets is subject to the parties’ obtaining the requisite corporate and regulatory approvals.
INFORMATION ON ALROSA GAS COMPANIES
Companies based in the Yamalo-Nenets Autonomous District
Originally acquired by the ALROSA Group in 2006, CJSC Geotransgaz and Urengoy Gas Company LLC hold exploration and development licenses to the Beregovoye and Ust-Yamsoveyskoye license areas, respectively.
CJSC Geotransgaz has been independently producing and selling gas since 2012 using Gazprom’s gas transmission network. Currently, the company is developing the Cenomanian and Valanginian deposits of the Beregovoe gas condensate field in the Yamalo-Nenets Autonomous District. Geotransgaz’s total production capacity reaches 2 billion cubic meters of gas and 300,000 tons of gas condensate per year.
Companies operating in Yakutia
ALROSA established its oil and gas companies in Yakutia in early 90s in order to lessen the dependence of local companies on the shipments of oil products from outside of the Republic.
OJSC ALROSA-Gas is engaged in natural gas production and operates the existing trunk and distribution pipelines in the Mirny District of the Republic of Sakha (Yakutia). Gas from the Srednebotuobinskoye oil and gas condensate field is delivered to consumers in the Western Yakutia through the Taas-Yuryakh-Mirny-Aikhal single-line trunk pipeline, 530 mm in diameter and 686 km in length.
Key consumers of natural gas in the Western Yakutia include diamond production companies, as well as power and heat generation companies in the town of Mirny. Currently, annual gas consumption of the Mirny District ranges from 230 to 245 million cubic meters. The pipeline has a designed throughput capacity of 1 billion cubic meters per year and can fully meet gas demand.
CJSC Irelyakhneft is an oil production company operating in a license area of the Irelyakh oil and gas condensate field. It also refines and sells crude oil and oil products.
ALROSA is a Russian diamond mining company and world’s largest producer of diamonds by carats. ALROSA is engaged in the exploration, mining, manufacturing and sales of diamonds. The Company’s operations are located in the Republic of Sakha (Yakutia) and Archangelsk region of Russia. In 2012 the Company produced 34.4 million carats of rough diamonds; revenue in 2012 was RUB 150.9 billion.
For more detailed information, contact ALROSA Media Center:
Phone/fax – (495) 620–92–50, ext. 13-21