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Novatek wins auction for Alrosa's gas assets with 30.3B ruble bid

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Novatek wins auction for Alrosa's gas assets with 30.3B ruble bid

Russian gas producer Novatek won an auction for PJSC Alrosa's gas assets with a bid of 30.3 billion Russian rubles, the company said Feb. 19.

In December 2017, Alrosa announced its decision to auction off 100% of JSC Geotransgaz and Urengoy Gas Co. LLC, which hold the licenses to the Beregovoye and Ust-Yamsoveisky gas fields in the Yamalo-Nenets Autonomous region in central Russia. The reserve price for the assets was set at 30 billion rubles with the bidding step of 100 million rubles.

Beregovoye contains estimated hydrocarbon resources of 436 million barrels of oil equivalent, while Ust-Yamsoveisky holds estimated hydrocarbon resources of 650 million barrels of oil equivalent.

Alrosa CEO Sergey Ivanov said the final price was in line with the company's expectations for the assets.

"It is particularly important for us that Alrosa finally managed to sell its non-core gas assets as it took us a long time to find a buyer. At the same time, we are pleased that a strategic investor who has vast experience and understands the production-specific issues acquired them," said Ivanov, adding that the company now has the opportunity to focus on developing its diamond assets.

As well as Novatek, Gazprombank and Rosneft also initially submitted applications to the Russian Federal Antimonopoly Agency to take part in the auction. However, Rosneft later refused to participate in the auction and lodged an official complaint with the Federal Anti-Monopoly Agency claiming that the terms of the auction were unfair and did not reflect market practice.

As of Feb. 16, US$1 was equivalent to 56.26 Russian rubles.