Page 13 - FSUOGM Week 30

FSUOGM INVESTMENT FSUOGM

Stroytransneftegaz
was involved in the
construction of the
Power of Siberia gas
pipeline.

Gazprom acquires key contractor

from Kremlin ally

RUSSIA RUSSIA’S Gazprom has reportedly acquired bought STNG in 2013, and since then its reve-
another of its main contractors Stroytransneft- nues have grown sevenfold, reaching RUB164bn
Gazprom has been egaz (STNG) from billionaire businessman last year. RBC estimated the Gazprom deal’s
consolidating control Gennady Timchenko and other shareholders, in value at RUB50bn ($700mn).
over the contractors' a deal that could be worth $700mn. According to various reports in the Russian
market during the past Gazprom has been consolidating control over media, Gazprom’s plan is to unite these con-
year. the contractors’ market during the past year. In tractors under a single company, Stroygazprom.
November last year it bought its top contractor By bringing more contracting work in-house,
Stroygazmontazh (SGM) from Arkady Roten- Gazprom may be trying to keep a handle on
burg for a reported RUB75bn ($1.04bn), and it costs. The company has notoriously struggled in
is also reported to be eyeing Gazprom Burenie, a the past to keep projects within budget, and its
drilling firm controlled by Rotenburg. opaque dealings with contractors with close ties
STNG is in second place in terms of how to the Kremlin have been blamed.
much business it has with Gazprom. It has "There have previously been reports about
worked at many of the company’s flagship pro- similar deals, e.g. in 2019, the company acquired
jects, including the $55bn Power of Siberia pipe- another large contractor, Stroygazmontazh,"
line completed to China in December last year. VTB Capital (VTBC) commented on July 27 on
One of its main contracts right now is at Gaz- Gazprom's most recent reported deal.
prom’s Chayandinskoye field in Eastern Siberia, However, VTBC notes that none of these
which feeds gas into Power of Siberia. deals has been reported in the company’s con-
Some 31.5% of STNG was owned by the solidated financial statements.
Volga investment group of Timchenko, who, like Gazprom promised its investors stricter capi-
Rotenburg, is a close Kremlin ally. He is also an tal discipline in February, maintaining its annual
investor in Russia’s top private gas firm, Novatek. average investments at around RUB1.2 trillion
A further 45% of the contractor was controlled until 2030.
by another businessman and former Gazprom Russian oil giant Rosneft is also understood
executive called Alexey Mityushov. to be seeking to buy a drilling unit called IDS
Gazprom closed a deal to buy the firm in May, Group, to reduce its reliance on third-party ser-
sources told RBC. Timchenko and Mityushov vice providers.™

Week 30 29•July•2020 www. NEWSBASE .com P13