Novatek Targets $100 Billion Value to Surpass BG as Output Rises

OAO Novatek (NVTK), Russia’s second-largest natural-gas producer, is targeting a market value of $100 billion to surpass BG Group Plc (BG/) as the Siberian company boosts reserves and production.

“We would love to be valued like BG, as a good comparable valuation, but I am sure BG wishes they were our size and our dynamics,” Mark Gyetvay, Novatek’s chief financial officer, told reporters today in Moscow.

Novatek’s market value has more than doubled in the past two years to 1.22 trillion rubles ($41 billion), still below 48.2 billion pounds ($76 billion) for BG, the U.K.’s third- largest gas producer.

Novatek is raising production at existing fields and through acquisitions, expanding processing capacity for exports of oil-like gas condensate and widening its gas distribution network to reach more customers in Russia.

Novatek boosted gas reserves 15 percent and production of the fuel by about 42 percent last year. It plans to double gas production by 2020.

The producer’s sales are limited to the domestic market by law, which grants state-controlled OAO Gazprom a monopoly on exports. Novatek plans to supply liquefied natural gas to markets in Europe and Asia from an Arctic project, working through Gazprom on a commission basis.

The company may reach a $100 billion value “in the near term,” given its resources and production, although low domestic prices currently constrain growth, Gyetvay said. Russia is gradually increasing its prices to reflect European market levels.

“You set a target for yourself, you want to set a goal to reach,” Gyetvay said. “We’re going to double the size of our company in five years.”

To contact the reporter on this story: Anna Shiryaevskaya in Moscow at ashiryaevska@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net

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