Novatek, Gazprom Neft to Buy Eni’s Share of Arctic Gas Unit

OAO Novatek and OAO Gazprom Neft, agreed to acquire Eni SpA (ENI)’s holding in a natural gas producer in the Russian Arctic for $2.94 billion, increasing control in one of the nation’s largest new energy projects.

Yamal Development, the venture owned by the Russian companies, will raise its total share in the SeverEnergia gas and condensate project to 80.4 percent from 51 percent, Novatek said in a statement today.

“This is a major positive for both Novatek and Gazprom Neft,” Oleg Maximov, an oil and gas analyst at Sberbank CIB in Moscow, said by phone.

The partners are boosting their stake after state-controlled OAO Rosneft’s $1.8 billion acquisition of 19.6 percent in SeverEnergia from Italian utility Enel SpA (ENEL), which closed this month. Rosneft’s ambitions to gain share in the domestic gas market have placed it in competition with Novatek, now Russia’s biggest supplier of the fuel after state-run OAO Gazprom, the owner of Gazprom Neft.

SeverEnergia will add more output than any other upstream energy project in Russia “by far” in the next five years, Sberbank’s Maximov, Alex Fak and Valery Nesterov said in a September note.

Novatek shares closed up 0.9 percent at 407.95 rubles in Moscow after dropping as much as 2.2 percent earlier in the day. Gazprom Neft and Eni closed little changed.

Yukos Bankruptcy

Eni and Enel bought SeverEnergia during the liquidation of bankrupt Yukos Oil Co. in 2007. Gazprom later bought a 51 percent share that it sold to Novatek and Gazprom Neft.

Eni confirmed the agreement with Yamal Development in a statement to the Italian Stock Exchange. Italy’s biggest oil and gas producer has an alliance with Rosneft to develop Arctic offshore fields in Russia and is a partner with Gazprom on gas export pipelines.

Gazprom Neft set final terms on $1.5 billion in bonds today at 6 percent, according to a person familiar with the matter, who asked not to be identified. Gazprom Neft is borrowing as it invests in a number of projects to grow output.

SeverEnergia has an estimated 1.35 trillion cubic meters of gas reserves and 669 million tons of liquids, according to Novatek’s statement.

To contact the reporters on this story: Stephen Bierman in Moscow at sbierman1@bloomberg.net; Jake Rudnitsky in Moscow at jrudnitsky@bloomberg.net

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

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