Minyak Rusia mulai dijelajah

Total Buys 25% Of Russia's Novatek For $1B
by David Gauthier-Villars
Wed, Sep 22, 2004 15:47 GMT

PARIS - Unfazed by the prolonged muddle surrounding OAO YUKOS (YUKO.RS), French oil major Total SA (TOT) said Wednesday it has reached agreement to buy a quarter of Russia's privately owned natural gas company OAO Novatek for about $1 billion.

Operating in the shadow of Russia's former gas monopoly OAO Gazprom (GSPBEX.RS), Novatek produced 18 billion cubic meters of gas last year, less than 3.5% of Russia's production but enough to meet France's needs for about six months.

Total's move comes as big oil companies are racing to strike deals in Russia, the world's second-largest oil producer behind Saudi Arabia and a country with vast untapped energy resources. Last year, BP PLC (BP) agreed to plow a total of $7.7 billion into a joint venture with Russian oil company TNK International and its various subsidiaries.

Some foreign investors, however, have been put off by the showdown pitting the Russian government against YUKOS, the country's largest oil producer.

Total's acquisition in Russia also comes as big energy companies have to decide whether to invest bulging profits stemming from soaring oil prices into new projects or return the money to shareholders.

"Novatek is an industrial project," said Societe Generale analyst Aymeric de Villaret. "It's better than (Total) buying back its own shares."

In May, Total signaled it might depart from its strategy to invest in oil and gas projects rather than in specific firms in Russia because it was increasingly frustrated that no large deal had materialized.

The French company hasn't given up hopes of one day developing the remote Vankor field in western Siberia, but talks with Russian state-owned company Rosneft (RNT.YY), which owns a permit, are dragging out.

Total didn't disclose the exact price of the transaction but said the deal values Novatek's gas reserves of 4 billion barrels of oil equivalent at just under a $1 per barrel.

Total said the purchase of a 25% interest plus one share will give it a blocking minority and the right to representation on the supervisory and management boards.

A spokesman for Novatek said the company has no access to export markets and relies on Gazprom's pipelines to transport its production. Novatek, which operates three major fields in Russia's main gas production region of Yamalo-Nenets in western Siberia, sells its production on the domestic market, where prices are regulated and remain stuck at a fraction of levels on the world market.

Under a bilateral agreement with the European Union on the terms of Russia's accession to the World Trade Organization, domestic Russian gas prices are supposed to rise to $49-$57 per thousand cubic meters over the next six years, from around $25 per tcm currently.

Novatek could prove a valuable asset in the coming years if Gazprom were to experience difficulties in meeting its export commitments. "The big thing is that Gazprom needs Novatek as much as Novatek needs Gazprom," UBS analyst Paul Collison said.

Total said documents relating to the deal have been submitted to Russian antitrust authorities for approval. Novatek said it has a plan to list on the Russian stock market but will review that strategy with its new shareholder.

At 0940 GMT, Total shares were up 0.7% to EUR169.40 in Paris.