French energy giant Total SA is to buy 12% of Russia's biggest independent natural gas producer Novatek and become its core partner in the Yamal liquefied natural gas project in the Russian Arctic, in a deal worth $4 billion, Novatek's chief executive Leonid Mikhelson said on Thursday.
Novatek stock on the MICEX stock exchange rose over 4% at the opening of trade on Thursday following the announcement of the deal.
Total and Novatek signed a memorandum of intent on the deal late on March 2. Total will buy 12% of Novatek and plans to acquire another 7.4% within the next three years, and will take a 20% stake in Novatek's LNG project.
"Total will be a majority shareholder (of the Yamal LNG project)," Mikhelson said.
Overall investment in the Yamal LNG project is estimated at $20 billion, Novatek said in a statement.
Mikhelson confirmed that Novatek planned to select other participants in 2011, keeping Total as the main partner.
"I think we'll have several (partners)," he added.
Novatek will retain control of the Yamal project because it intends to exercise an option for the buyback of 23.9% of the company's shares after selling 20% of its stock in the Yamal project to Total.
Varix Enterprises Ltd., a Cyprus-based company controlled by Gazprombank, owns a 25.1% in Yamal LNG, while another 23.9% stake is owned by Cypriot Innecto Ventures Ltd., controlled by Russian businessman Gennady Timchenko and his partner Pyotr Kolbin. Timchenko is also one of Novatek's co-owners, holding a 23.49% stake.
The companies plan to develop the giant South Tambei gas field on the Yamal Peninsula. The field has Category C1+C2 reserves of 1.26 trillion cubic metres of natural gas and 51.6 million metric tonnes of gas condensate.
MOSCOW, March 3 (RIA Novosti)
