Rosneft Buys $1.8 Billion Enel Stake in Russia Gas Producer

OAO Rosneft agreed to buy a $1.8 billion stake in a Siberian venture from Italy’s Enel SpA as the state-run oil producer seeks a greater share of Russia’s natural-gas market.

Rosneft will acquire a 19.6 percent stake in SeverEnergia, which produces gas in western Siberia, according to a statement today. OAO Gazprom Neft and OAO Novatek own 51 percent of the project with Italy’s Eni SpA and Enel holding the remainder.

The acquisition moves Rosneft closer to a goal of boosting natural gas output to 100 billion cubic meters by 2020. That amount is equal to Canada’s annual consumption and would make Rosneft the largest Russian supplier behind state-run OAO Gazprom. Under Chief Executive Officer Igor Sechin, a long-time ally of President Vladimir Putin, Rosneft has steadily increased its weight in Russia’s energy sector, buying the TNK-BP oil venture for more than $50 billion from BP Plc and its partners.

“SeverEnergia is really a transformative asset for all the partners involved,” Oleg Maximov, an oil and gas analyst at Sberbank CIB in Moscow. “We think that Rosneft got a very good deal out of this.”

SeverEnergia has the potential to produce 35 billion cubic meters of gas a year, according to a Novatek presentation made last month. It may also pump out 6.5 million metric tons of gas condensate, which is similar to light crude oil.

Gas Strategy

Enel and Eni bought the company during the liquidation of bankrupt Yukos Oil Co. in 2007, the only international energy firms to buy assets in the auctions. Gazprom, the world’s largest gas producer, later bought a 51 percent share, which it sold to Novatek and its liquids arm, Gazprom Neft.

“Gas business is one of the company’s strategic development priorities,” Sechin said in today’s statement.

Rosneft shares fell as much as 1.1 percent in Moscow following the announcement, and closed down less than 0.1 percent at 259.5 rubles. Enel shares rose as much as 2.4 percent in Milan.

For the Italian company, the SeverEnergia sale is part of a plan to sell assets announced this year, Enel CEO Fulvio Conti said in the statement. Russia will remain a “strategic country” in power generation and sales for Enel, he said.

Today’s deal is the latest in a string of acquisitions for Rosneft, which in July agreed to take full control of gas producer OOO NGK Itera for $2.9 billion. The Moscow-based company has about $71 billion in debt, according to data compiled by Bloomberg, largely as a result of the TNK-BP transaction, which closed in March this year.

The deal raises some concerns that Rosneft will pursue deal-making at the expense of debt reduction, said Alfa Bank analyst Alexander Kornilov. Still, he said: “The acquisition of gas assets in Russia looks reasonable, given Rosneft’s ambitions.”

Before it's here, it's on the Bloomberg Terminal.