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Russian antitrust regulator probes Alrosa’s gas assets sale

EBR Staff Writer Published 11 January 2018

The Russian Federal Anti-Monopoly Service (FAS) has launched a probe into diamond producer Alrosa’s upcoming sale of its natural gas assets following a complaint from state-owned oil giant Rosneft.

The oil major, which cancelled its plans to bid for the assets, said that the auction terms of Alrosa were unacceptable, reported Reuters.

In its complaint to FAS, Rosneft said that certain terms of the sale are not satisfactory. It also questioned the reliability of the stated resources of the gas deposits that would go up for auction.

The Russian diamond mining company had kept a starting price for its natural gas assets at RUB30bn ($526m).

FAS said that the terms of the sale scheduled for 19 February by Alrosa had signs of irregularities. The competition watchdog added that it will consider Rosneft’s complaint and look into the size of RUB21bn ($370m) of down payment and also the payments deadline of 10 January.

Russian gas producer Novatek had revealed its interest in acquiring Alrosa’s gas fields. As per the Russian Finance Ministry, seven companies are likely to participate in the auction.

Before lodging the complaint to FAS, Rosneft and Bashneft, its subsidiary had sought approval from the watchdog to allow them to participate in the bidding for Alrosa’s natural gas assets.

Rosneft spokesman Mikhail Leontyev was quoted by Reuters as saying: “The request itself is not participation.”

Leontyev alleged that the terms of the sale would not let any future buyer to log claims with Alrosa should the resources it bought end up being lesser than what was stated initially.

Leontyev added: “At the moment, with the information we have about the asset, we can’t risk the interests of our shareholders. We won’t play under such rules.”

About five years ago, Rosneft made a $1.4bn deal to acquire the same gas assets along with oil and gas fields from Alrosa, located in the far eastern region of Russia, in a move to grow its natural gas operations.

However, the transaction fell apart as the parties could not come to a final understanding over the price of the assets.