Alrosa Sells Natural Gas Operations for $1.38 billion

(IDEX Online News) – Russian mining giant Alrosa has sold natural gas assets to the Rosneft Oil Company for around $1.38 billion.

The deal covers companies operating in the Yamalo-Nenets Autonomous District, and the Republic of Sakha (Yakutia) where almost all Alrosa’s diamond mining operations are located.

Alrosa said it will use the proceeds from the sale to repay its debts. “The decision to sell the gas assets was made in pursuance of Alrosa Group’s strategy which focuses on boosting diamond production capacities and gradual divestiture of non-core assets,” the miner said in a statement.

“We believe that the arrival of Rosneft, as a new shareholder, would give a boost to further development of Alrosa’s oil and gas assets in the Yamalo-Nenets Autonomous District and Western Yakutia”, said Alrosa President Fedor Andreev, who signed the agreement with Rosneft President and Chairman Igor Sechin in the presence of Russian Prime Minister Dmitry Medvedev.

Alrosa established oil and gas operations in Yakutia in the early 1990s in order to lessen the dependence of local companies on the shipments of oil products from outside of the republic.

It is involved in natural gas production and operates the existing trunk and distribution pipelines in the Mirny District of the Republic of Sakha (Yakutia). The main consumers of natural gas in the Western Yakutia include diamond production companies, as well as power and heat generation companies in the town of Mirny.