MOSCOW (Reuters) - Russia’s top non-state gas producer Novatek may bid for gas fields owned by Russian diamond miner Alrosa, but oil giant Rosneft may stay away from the auction, citing tight deadlines, the companies signaled on Thursday.
Alrosa, the world’s largest producer of rough diamonds, said this week it would sell its gas assets in the Yamalo-Nenets Region in a Feb. 19 auction with a starting price of 30 billion rubles ($520 million).
The potential deal is subject to the approval of Russia’s Anti-Monopoly Service, and Novatek has already informed the agency of its interest in buying Alrosa’s gas fields, Novatek told Reuters. It declined further comment.
Russia’s top oil producer Rosneft, however, is unlikely to take part in the auction because it believes the conditions are not transparent enough and do not give potential buyers enough time to prepare their bids, Rosneft spokesman Mikhail Leontyev said.
Rosneft’s absence from the auction could reduce competition for the assets.
In 2013, Rosneft agreed to buy the same gas assets and other gas fields in Russia’s far eastern region from Alrosa for $1.4 billion, in a drive to expand its natural gas business.
But the deal fell through because of disagreement over price. As of 2013, the fields were supposed to increase Rosneft’s recoverable gas reserves by more than 200 billion cubic meters (bcm).
Russia will be on New Year holidays from Jan. 1 to 8. Under the terms of the auction, the 21-billion-rouble deposit must be paid by Jan. 10.
According to Rosneft, the two remaining working days do not provide enough time to make a decision and submit the deposit.
“It is indecent. They believe that everyone has gone on a binge ahead of the holiday and they file the auction conditions,” Leontyev said. “Why do you hurry up? Especially when the deposit is 70 percent of the starting price.”
“We are unlikely to take part in such an auction. We do not believe in the possibility of conducting the auction with such parameters,” he added.
The Finance Ministry, which oversees Alrosa, said the auction terms are “logical and clear”. It added that there have been seven potential bidders.
“The requirements on the collateral are determined by the past negative experience when the deal fell through because the potential buyer lacked sufficient funds,” it said in emailed comments to Reuters, without naming the potential buyer it was referring to.
These assets are a non-core business for the diamond producer, and Alrosa has tried to sell them a number of times.
Previous attempts failed as would-be buyers backed away at the last moment due to lack of funds, Alrosa said.
Alrosa prepared for the auction throughout 2017 and discussed the terms with potential bidders several times, it added.
Reporting by Vladimir Soldatkin, Polina Devitt and Diana Asonova; additional reporting by Darya Korsunskaya; writing by Polina Devitt; editing by Adrian Croft