Rosneft to Sell Gas-Processing Units Gained in TNK-BP Purchase

OAO Rosneft (ROSN), Russia’s largest oil producer, may get as much as $2 billion for its 49 percent share in a natural-gas processing venture inherited with its TNK-BP purchase, according to analysts.

OAO Sibur, the Russian petrochemicals company owned by billionaires Leonid Mikhelson and Gennady Timchenko, will own 100 percent of the Yugragazpererabotka venture after the purchase, according to an e-mailed statement from both companies, which did not disclose a price.

The stake may be worth $1 billion to $2 billion, according to Alexander Nazarov, an oil and gas analyst at OAO Gazprombank, and Grigory Birg, an analyst at Investcafe, a Moscow-based equity-research company.

The sale of the plant, which processes gas produced at fields with crude oil, will be among the first by Rosneft of assets it gained in the $55 billion acquisition of TNK-BP last year. Rosneft guarantees it will increase supplies to 10 billion cubic meters a year to 2032 as its targets 95 percent utilization of associated gas throughout its fields, according to the statement.

“Rosneft is realizing its long-term gas strategy and monetizing the associated gas reserves, while Sibur is getting access to resources,” Birg said by e-mail.

The petrochemicals producer will finance the deal using its own cash flows and debt, said a Sibur press official who asked not to be identified, citing company policy. Cash flows are increasing with the conclusion of investments in several plants last year and this year, the official said.

Sibur net debt won’t surpass 2.5 times earnings before interest, taxation, depreciation and amortization in the current period and remain under two times the earnings metric in the next three years, according to the press official.

Yugragazpererabotka owns three gas-processing plants with total capacity of 13.4 billion cubic meters a year, more than the output of Libya last year, according to BP Plc data. It also owns pipeline infrastructure, according to the release.

Russian plans to reduce the flaring of associated gas led oil producer TNK-BP and Sibur to create the venture in 2007.

To contact the reporter on this story: Stephen Bierman in Moscow at sbierman1@bloomberg.net

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

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