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Gazprom buys prime Arctic shelf assets from Rosneft

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MOSCOW, August 5 (RIA Novosti)-Russia's natural gas monopoly, Gazprom, pulled off something of a coup with the acquisition of state-owned oil major Rosneft's Arctic shelf energy projects, a leading business daily reported Friday.

Vedomosti wrote that Gazprom now owned assets that are worth far more than it paid for them.

Rosneft subsidiary Purneftegaz yesterday posted a net profit of about $1 billion for the second quarter - 90 times up on the first quarter - after selling its 50% stake in Sevmorneftegaz, a Gazprom/Rosneft joint venture with licenses to the Arctic Shtokman natural gas field and the Prirazlomnoye oil field, for $1.3 billion.

Under a Gazprom-Rosneft deal, the natural gas giant's banking arm, Gazprombank, bought the 50% stake in Sevmorneftegaz, 49.95% in major Arctic projects in the Barents and Pechora seas, and 26% in Rosshelf, another holder of Shtokmanov and Prirazlomnoye licenses. When the project was announced last year, a Gazprom source said Gazprombank had bought the whole lot for $1.7 billion, which Rosneft spent on Yuganskneftegaz, the core production asset of embattled oil giant Yukos.

Under the deal, the paper wrote, Gazprombank could call for a share buyback until June 20, 2005 but a company official said Gazprom chose not to do so. "This is a strategic asset, we have great hopes for the shelf [deposits]," he said.

Lev Snykov, an analyst with FIM Securities, said Gazprom was correct to move ahead with the deal. With the Shtokman field alone valued at $5 billion, the assets are worth many times the $1.7-billion price tag, he said.

Prirazlomnoye (Pechora Sea) reserves are estimated at 83.2 million metric tons of oil; Shtokman (Barents Sea), a target for liquefied natural gas exports to the United States, is estimated to have about 3 trillion cubic meters of natural gas and about 30 million metric tons of gas condensate.

Prior to the Rosshelf deal, the company's major shareholders were Gazprom (53%), Rosneft (26%), and drilling platforms producer Sevmashpredpriyatie (13%).

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