the RUSSIA oil & gas competitive intelligence report - Report Buyer

Russia Oil and Gas Competitive Intelligence Report 2010
Botaş and German company E.ON. According to Kommersant, other companies affected are Germany's
BASF and RWE, and France's GDF Suez and Total.
Gazprom announced the country's largest ever debt issuance on April 7 2010, in an attempt to raise
US$10.2bn on Russia's bond market. The decision highlights Gazprom's attempts to take advantage of a
highly active domestic bond market to restructure its long-term debt obligations. Gazprom instructed its
banking arm, Gazprombank and Moscow-based Renaissance Bank to run the bond issue programme,
which will comprise 13 issuances over a five-year period.
By July 2009 Gazprom was set to acquire a controlling stake in Kyrgyzstan's national gas company
Kyrgyzgaz, following Bishkek’s approval of an agreement allowing Gazprom to participate in the
company’s privatisation. Gazprom has apparently proposed buying a 75% plus one share in Kyrgyzgaz.
The negotiations, however, are still in progress for unspecified reasons.
In November 2009, Gazprom sold to Germany’s E.ON Ruhrgas a 25% stake in Severneftegazprom, a
Gazprom subsidiary and licence holder of the Yuzhno-Russkoye gas field in West Siberia. In return,
Gazprom received from E.ON a 49% stake in Russia's Gerosgaz, which itself holds an almost 3% stake in
Gazprom. Gazprom now owns 100% of Gerosgaz. E.ON’s direct 3.5% share in Gazprom has not been
affected by the deal.
In June 2009, Gazprom and Statoil signed a three-year MoU on E&P in northern Russia and Norway,
replacing a 2005 cooperation agreement signed with Statoil and Norsk Hydro prior to their merger.
According to a joint statement, the new MoU will not only see the two companies work together in E&P
but also design and development of technologies for the harsh Arctic environment. In December 2009, the
companies deepened ties by signing another MoU on joint gas trade in the US.
Gazprom and Kogas signed a gas and chemical deal worth US$102bn in September 2008. As part of the
agreement, Russia will supply South Korea with 10bcm of gas per year over a 30-year period from 2015.
In April 2009 Gazprom exercised its right to purchase a 20% stake in oil producer Gazprom Neft from
Eni. Under the deal Gazprom will pay US$4.2bn for the stake. SeverEnergia, (at the time of the deal
60:40 owned by Eni and Enel) acquired equity in Gazprom Neft and a 100% stake in Western Siberiafocused
gas companies ArcticGaz and Urengoil in April 2007 for RUB151.54bn (US$5.83bn) during a
controversial liquidation auction of Yukos assets. As part of the deal, Gazprom secured an option to buy a
majority stake in the gas assets and the shares in Gazprom Neft before April 9 2009 for around US$4bn.
At the time, the deal seemed in Gazprom's favour as it was believed to undervalue Gazprom Neft. The
agreed US$4.2bn purchasing price is equal to the price paid by Eni, plus interest, although it is
significantly above 20% of Gazprom Neft’s valuation at the time that the deal went through (US$2.2bn).
The economics of the deal are perplexing, highlighting the deal’s marked political undertones.
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