Kovykta’s future almost settled
04.05.2010 (15:59) | RBC
TNK-BP’s stake will be bought out with Gazprom and Rosneft dividends.The future of the Kovykta gas field is nearly decided – TNK-BP’s stake in Rusia Petroleum, which owns the license to the Kovykta field, will be sold to the state-owned Rosneftegaz. The parties are currently negotiating the price. With a number of companies bidding for the asset, TNK-BP is in a strong position to ask for a considerable sum, but at the moment, Rosneftegaz has no money to pay for it. A source in TNK-BP confirmed that the parties had so far been unable to agree on a price.
Notably, TNK-BP has continued talks with other prospective buyers, which enables the company to raise the price. Initially, Gazprom was the only contender for the asset. But Rosneft – whose interests are now lobbied by Deputy Prime Minister Igor Sechin - and businessman Gennady Timchenko recently stepped into the ring.
Meanwhile, Rosneftegaz is really short of cash right now. The company received roughly RUB 16.2bn (USD 550m) in dividends for 2008 from Rosneft and Gazprom, in which it controls 75.16 and 10.74 percent, respectively. Dividends for 2009 have already been declared, and they are pending corporate approvals in June. The government’s urging of the companies to pay out up to 25 percent of the companies’ respective net profits as dividend was prompted by the necessity to buy a whole range of assets, including the stake in Rusia Petroleum. With this in mind, Rosneft boosted its dividend by 20 percent to RUB 2.3 (approx. USD 0.078) a share, and Gazprom hiked its dividend up by a factor of 6.6 – to RUB 2.39 (approx. USD 0.081) a share. In the estimation of Dmitry Lyutyagin, a Veles Capital analyst, Rosneftegaz will get RUB 6bn (approx. USD 204.22m) from Gazprom, and RUB 18.3bn (approx. USD 622.87m) from Rosneft for 2009, bringing the total for the past two years up to RUB 40.5bn (approx. USD 1.38bn).
A source in TNK-BP revealed to RBC Daily that the company was hoping to agree on a price that would cover the field’s development costs and feature a premium. TNK-BP’s investment in Kovykta totaled USD 664m, and before the crisis the company’s co-owner, Viktor Vekselberg, put the asset within the range of USD 0.9bn-1.2bn. Just a month ago, however, he cited a different figure: USD 700m-900m.
Gazprom, which inked a memorandum of understanding with TNK-BP in 2007, has stayed in the background and refrained from voicing any official view. In fact, the last time the company mentioned the issue was in February 2010, when CEO Alexei Miller stated that Gazprom did not need Kovykta’s resources to export gas to Asia.
Yet, Natural Resources Minister Yury Trutnev made a surprise move to support the gas monopoly just a short time ago: he announced that the ministry was ready to reconsider revoking the Kovykta license if TNK-BP allowed Gazprom to develop the field. By all appearances, the minister remembered that if TNK-BP sold the stake to Gazprom, it would get the option to buy back 25 percent plus one share under the memorandum.
The ministry has repeatedly threatened Rusia Petroleum with license revocation, and with good reason: work on the field in violation of the license agreement was only marginal. The most recent check was held in February, but Deputy PM Sechin (who now chairs both Rosneft’s and Rosneftegaz’s board of directors) stood up for the company.
TNK-BP wants roughly USD 1bn for the assets, while the government is likely to be gravitating towards USD 500m, senior analyst at Arbat Capital Vitaly Gromadin noted. He added that the sides might meet halfway and come to an agreement at around USD 700m. He did not rule out that the stake could eventually end up in Gazprom’s hands, since the field could provide gas for exports to China, and its development relies heavily on the outcome of ongoing gas price talks with China.
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