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Far East Report Gazprom set to swallow state-owned Rosneft Allen Baker
The giant Russian natural gas company Gazprom is set to merge with state-owned Rosneft. The new company would be one of the top oil producers in Russia, as well as holding more than a fifth of the world’s total gas reserves. Gazprom already has more hydrocarbon reserves than any other private company.
The Russian government already controls Gazprom with a 39 percent stake. But the new move, announced by Russian President Vladimir Putin Sept. 14, will give Russia a majority stake in the gas giant, which could then open the way for wider foreign ownership of Gazprom.
Russian laws now limit foreign owners to 20 percent of the company, and though Putin said he favored ending the dual set of rules on buying and selling Gazprom shares, Interfax reported that Industry and Energy Minister Viktor Khristenko said Sept. 15 that the limits on foreign ownership might not be lifted altogether.
Foreign investors now officially own about 12 percent of Gazprom, according to company figures, but the percentage is probably higher due to third-party purchases.
Rosneft is worth in the neighborhood of $4.7 billion, and if Gazprom treasury stock was used for a purchase at that price, the Russian government would get a bit over the 50 percent Gazprom stake it wants. The actual structure of the deal wasn’t announced.
Gazprom produces about 220,000 barrels of oil a day. With Rosneft in the mix, the total would reach nearly a million barrels daily. Reserves of the two companies amount to about 650 trillion cubic feet of gas and 2.4 billion barrels of oil.
Rosneft also has a piece of the Sakhalin-5 project, which could boost reserves significantly. The two companies are jointly developing potential reserves in the Barents Sea, and are part of a group exploring in Eastern Siberia.
The new entity, with its government component, could also be a strong bidder if pieces of Yukos are sold off. Lukoil wants partner, but ConocoPhillips may not get 25 percent Lukoil wants the buyer of the government’s 7.6 percent stake in the company to become a strategic partner, a company official told a Russian newspaper Sept. 11. But Lukoil chief executive Vagit Alekperov was quoted by Reuters as saying that ConocoPhillips, the leading contender for the stake, isn’t seeking a 25 percent stake that would allow it to block some moves by the company.
Just how much of Lukoil ConocoPhillips may want isn’t clear, but even the 7.6 percent is expected to cost $2 billion or more. Lukoil currently has the second-largest oil reserves of any private company in the world.
Alekperov also said that there was a third bidder expected to compete for the government stake besides ConocoPhillips and a firm controlled by David Guggenheim of the United States. He identified the third bidder as IFD Capital, which manages Lukoil’s pension fund. The auction will be held on Sept. 29. Chinese sales agreements signed for Tangguh LNG The China National Offshore Oil Corp. has signed sales agreements for liquefied natural gas that would be shipped from the BP-led Tangguh field in Indonesia, CNOOC announced Sept. 12.
The fuel will be sold to gas firms serving five cities as well as three power plants in the eastern province of Fujien.
CNOOC is a partner in Tangguh, along with operator BP, which holds 37 percent of the project. A decision on whether the field will be developed will come later this year.
China is increasing its commitment to LNG supplies as the country’s energy consumption has skyrocketed and big gas imports from Siberia look less likely. Two more LNG receiving terminals were approved late last month, bringing the country’s total to four, each capable of receiving 3 million tons of LNG per year. The terminals approved recently are in Qingdao, north of Shanghai, and in Shanghai itself. Sakhalin could well be the source of LNG for those terminals.
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