Mergers & Acquisition Fertilizer Company Eurochem Sells its Oil and Gas Subsidiary Severneft-Urengoy to Novatek
Novatek, one of the largest independent natural gas producers in Russia, takes over oil & gas company Severneft-Urengoy from fertilizers conglomerate Eurochem for an undisclosed sum.
Zug/Switzerland – Eurochem, a Swiss based nitrogen and phosphate fertilizer company owned by Russian commodities tycoon Andrey Melnichenko, had recently made headlines with the acquisition of two potash mines in China for roughly US $ 6 billion. Now, the company with production facilities in Russia, Belgium and Lithuania as well as mining activities in Asia and several fields in Russia, plans to restructure its oil and gas business.
Dmitry Strezhnev, Eurochem's CEO, commented: "The sale of Severneft-Urengoy will streamline this business division and improve its profitability down the line, especially once our Astrakhan gas field is operational and supplying gas to our production facilities in Russia."
The sale of Severneft-Urengoy shall now enable the Group to focus on the exploration and subsequent development of gas condensate fields in the Astrakhan and Saratov regions in Russia, and the Kamenkovsky gas field in Kazakhstan, to better meet the company's internal gas needs. While these gas fields continue to be developed, Eurochem will buy gas from unaffiliated parties. Currently, Severneft-Urengoy accounts roughly 25 percent of Eurochem’s natural gas consumption.
The company had acquired Severneft-Urengoy in 2012 for $ 403 million. The total resource potential of the site in the Yamal-Nenets Autonomous Area in Russia, according to the Russian classification (categories C1, C2, C3) as of December 2016, is 918 million barrels of oil equivalent of hydrocarbons.