UPDATE 1-Russia's Novatek to pay $900 mln for Sibneftegaz

* $150 mln to be paid first, $750 mln at end-2011

* Deal part of strategy to increase asset base

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MOSCOW, Nov 16 (Reuters) - Novatek NOTK.MM, Russia's biggest independent gas producer, said on Tuesday it would pay $900 million for Sibneftegaz, the latest acquisition in its strategy to increase its asset base.

Chief Financial Officer Mark Gyetvay said the total size of the deal, including Sibneftegaz’s 11 billion rouble ($354 million) debt, would be nearly $1.2 billion.

“We will finance this acquisition with an initial cash payment of approximately $150 million, with the remaining balance of approximately $750 million due to be paid at the end of the fourth quarter 2011,” he told a conference call.

Novatek last week announced the deal to buy 51 percent of Sibneftegaz from Gazprombank, an affiliate of Russia's top gas company Gazprom GAZP.MM.

Sibneftegaz holds licences for the development of oil and gas condensate fields totalling 395.53 billion cubic metres (bcm) of natural gas and 8.44 million tonnes of gas condensate in the Arctic region of Yamal Nenets.

It produced 7.3 billion bcm of gas in the first nine months of 2010.

Novatek is looking to increase its output by more than 12 percent next year, which could mean more than 41 bcm.

In September Novatek, together with Gazprom Neft SIBN.MM, an oil arm of Gazprom, agreed to buy 51 percent of SeverEnergia, which has upstream assets in the same region.

Novatek plans to issue $1.5 billion worth of Eurobonds to finance the deal. [ID:nLDE68E1U1] (Reporting by Vladimir Soldatkin; Editing by Will Waterman) ($1=31.10 Rouble)