Rosneft and Engel sign gas supplies agreement

OJSC Rosneft and OJSC Enel OGK-5 have signed an agreement on the long-term gas supplies to Enel OGK-5 enterprises. The agreement was signed by Rosneft President, Chairman of the Management Board, Igor Sechin and General Director of OJSC Enel OGK-5 Enrico Viale.

As part of the agreement Rosneft plans to deliver gas in the period from 2014 to 2025 inclusively to Konakovskaya, Sredneuralskaya and Nevinnomysskaya Power Stations of OGK-5.

Commenting on the agreement signed, Igor Sechin said, “Rosneft holds significant gas reserves and monetizing this gas potential is one of the Company’s strategic goals. Domestic gas market is particularly attractive for us and Rosneft aims to further maximize gas supplies in Russia on a long-term basis. Signing an agreement with Enel OGK-5 to supply gas directly to Russia’s largest generating utilities is the next successful step in expanding Rosneft gas business. It will also ensure guaranteed fuel supplies for power generation on transparent terms.”

Acquiring stakes

This news comes on the back of Rosneft’s agreement yesterday to acquire a 40% stake in Arctic Russia B.V. from Enel, which will lead to Rosneft’s indirect ownership of a 19.6% stake in SeverEnergia. The stake will be acquired by NGK Itera, a subsidiary of Rosneft, which is a centre consolidating gas assets within Rosneft group.

The largest independent gas producer in Russia

The transaction will help considerably increase Rosneft recoverable gas reserves, and will create a solid ground for consistent implementation of the Company’s gas strategy, aimed at gas production increase to 100 billion m3/y and transformation of Rosneft into the largest independent gas producer in Russia.

The transaction is valued at 1.8 billion USD and its completion is subject to regulatory and other approvals.

The parties also continue to work actively on developing cooperation in the area of gas supplies.

“Further growth”

Commenting on the agreement signed, Igor Sechin, Rosneft President and Chairman of the Management Board, said: "Gas business is one of the Company's strategic development priorities. Acquisition of a stake in SeverEnergia will create a multiplying effect for further growth. It will help generate additional synergies from the joint asset development within the Yamal Gas Cluster through optimisation of capex and sales channels. It will also help the Company in the long run to expand contracted gas deliveries, increasing the Company's market cap and raising shareholder value."

Adapted from press release by Ted Monroe

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