Russ Oil-Gas

04 April 2007 - Upstream OnLine - By Vladimir Afanasiev - Russia's gas monopoly Gazprom will buy at least 51% of bankrupt producer Yukos' gas assets under a deal with Italian energy players Enel and Eni, a Gazprom executive said today. "The structure of what we will get is still being discussed, but we will definitely get 51%, that is a minimum," Gazprom's export chief Aleksandr Medvedev told Reuters. Eni and Enel won a Russian state auction for Yukos' gas assets this morning, paying 151.536 billion roubles ($5.83 billion) after competing hard with Russia’s Nefttradegrup, representing Russia’s state controlled Rosneft oil company. The sale included Yukos gas producers Arcticgaz and Urengoil which own fields in Gazprom’s core gas producing Yamal-Nenets autonomous region in West Siberia, with combined recoverable gas reserves of these fields close to 1 trillion cubic metres of gas. Under the deal, Gazprom aims to take the 51% shareholding in Arcticgaz and Urengoil while Eni and Enel will share the remaining 49% to comply with Russian requirements that foreign companies cannot own a controlling stake in strategic energy assets in the country. The lot has also included the Yukos’ 20% stake in Gazpromneft, the oil subsidiary of Gazprom and also the fifth largest oil producer in Russia. Gazprom has said it has a call option to buy the Gazpromneft’s stake off Eni and Enel and Medvedev said that this stake would be repurchased in full and the deal might close as early as tomorrow. Meanwhile, Eni said it would sell the 20% stake in Gazpromneft to Gazprom for $3.7 billion plus costs. Based on the price of Gazpromneft’s shares this week, the market value of this stake is estimated at $3.9 billion. Eni said the agreed option to sell the asset to Gazprom may be exercised at any time within two years. Robert Amsterdam, a US lawyer acting for former Yukos owner, Mikhail Khodorkovsky, lambasted the results of the today’s auction and a previous auction held on 27 March, stating that “these are not open free auctions but rather organised sales at knock-down prices and with predetermined winners. While Eni appears at first sight to have won this auction, in reality Gazprom is the winner.” “The willingness of Eni to participate in this farce says more about its surrender to the new gas Opec of Algeria and Russia than anything else," he added.