“Novatek” is the large Russian gas company. All deposits and license sites of the Open Society “Novatek” are located in the basic gas region of Russia – Yamal-Nenets autonomous region.
“Novatek” also include the Purovsky factory on processing of a gas condensate. A blocking share holding of the “Novatek” owns Open Society “Gazprom”.
Company creation
Open Society Novatek’s history starts from the Open Society “Novafininvest” based in 1994. In the same year “Novafininvest” together with “Purneftegazgeologiej” and “Surgutgazpromom” has founded enterprise “Tarkosaleneftegaz” which has become subsequently by the largest extracting division of the company. In 2001 “Novafininvest” has got a controlling interest of “Purneftegazgeologii”.
An unfortunate merge to “Itera”
In spring of 2002 of “Novafininvest” and “Itera” have signed the agreement on association of the oil and gas actives. The parties noticed that merge of the companies will promote increase of efficiency of extraction, transportation, and sale of hydrocarbonic raw materials. However, autumn of the same year of “Novafininvest” and “Itera” declared refusal of the planned transaction. The companies haven’t explained a cause of a failure from merge, but, most likely it has been connected by that within 2002 “Itera” has lost a part of the extracting and marketing enterprises, first of all a controlling stock of “Severneftegazproma”.
Name change
On March, 11th, 2003 annual general meeting of shareholders of Open Society “Novafininvest” on which the decision on change of the name of the company was accepted has taken place. «Novafininvest» has been renamed in «Novatek». According to the shareholders, the new name reflects more full a company field of activity.
Consolidation of actives
Purovsky factory on processing of a gas condensat |
Leonid Mihelson – Chairman of the Board |
Within 2003 «Novatek» has carried out a number of transactions directed on share increase in the enterprises under control to it. In particular, Open Society “Novatek” share in an authorized capital stock of “Purneftegazgeologii” has increased from 49,39 % to 70,6 %, in “Tarkosaleneftegaze” – from 31,72 % to 32,2 %, “Tambejneftegaze” – from 74,9 % to 100 %.
Also «Novatek» has got 100 % of the Open Society “Minlei”. In the end of 2003 of Open Society “Minlei” it has been attached to Open Society “Novatek”.
In 2004 «Novatek» has continued consolidation of actives. In December, 2004 «Novatek» has published the communique about increase in a share of participation of the company in an authorized capital stock of “Tarkosaleneftegaza” from 32,3 % to 100 %, “Hanchejneftegaza” – from 43 % to 100 %.
Sale Total of a blocking share holding
In September, 2004 Total and Open Societies “Novatek” have signed the report according to which Total will get 25 % plus 1 action of «Novatek». The parties have preliminary estimated cost of a blocking share holding «Novatek» in $850-1000 million. Transaction should take place till the end of 2004, however it isn’t finished till now. The federal antimonopoly service of the Russian Federation hasn’t given out the permission to fulfillment of the transaction and has requested the additional of participants
Placing of actions of 3 %
In February, 2004 shareholders of Open Society “Novatek” have carried out placing of shares of company of 3 % among institutional and private investors. As the agent on placing the investment company «the Three Dialogue» has acted. Demand for actions has considerably exceeded the offer. The sum of the involved means has made Interest to actions «Novatek» about $100 million have shown over 80 investors from Russia, the USA and Europe.
Sale of “Tambejneftegaz”
In June, 2005 of Open Society “Novatek” declared an exit from Open Society ” Tambejneftegaza ” authorized capital stock. The Share holding of Open Society ” Tambejneftegaza ” at a rate of 25,1 % has been sold Open Company “Gazprombank-invest”.
Start of Purovsky factory
In June, 2005 «Novatek» has started the factory first stage on processing of a gas condensate. The factory is located in 140 km to the south of a city New-urengoj. The enterprise will process 2 million tons of an astable gas condensate a year, letting out 1,6 million tons of a stable condensate and 400 thousand tons of the hydrocarbonic gases.
For maintenance of a total load of capacities of the enterprise, «Novatek» intend to involve raw materials of other companies. Possibility of increase in capacity of factory to 5 million tons of a condensate a year is in the long term provided.
The commodity output will be taken out from factory by rail. For service of a railway economy forwarding company “NovaTrans” which has got on the terms of leasing of 420 tanks for transportation of the gases is created.
Opening of a transshipment complex in port Vitino
In June, 2005 in port Vitino opening ceremony of a transshipment complex of company “Novatek” has taken place. The complex is capable to serve tankers load-carrying capacity to 60 thousand tons. The complex is intended for transportation of production of Purovsky factory.
“Gazprom” has got 19,4 % of actions of the Open Society “Novatek”
In the autumn of 2006 “Gazprom” has got 19,4 % of ordinary actions of the Open Society “Novatek”. Open Society “Novatek” actions are redeemed at Open Company “Levynite” and SWGI Growth Fund (Cyprys) Ltd. Through German branch “Gazprom” ZGG GmbH.
The parties have agreed that the share holding “Novatek” which “Gazprom” and its affiliated persons will own, during any period of time won’t exceed 19,9 % of the placed actions of the”Novatek”.
Company’s financial results
| 2006 | 2007 | 2008 | 2009 | 2010 | |
|---|---|---|---|---|---|
| Revenue, USD bln | 48,8 |  62,4 |
79,2 |
89,9 |
117 |
| Net income, USD bln | 14 | 18,7 |
22,9 |
25,7 |
40,2 |
Novatek annual report for 2010
Recommendations
Strengths
Stable growth of industrial indicators
The company annually increases gas production.
The reliable shareholder
“Gazprom” posesses 19,9 % of actions “Novatek” that reduces risk of the conflict to a gas monopolist and simplifies access to gas-transport system.
Rise in prices for gas in home market
The government of Russia pursues the scheme on gradual increase in the adjustable in-Russian prices at gas to world level.
Weaknesses
Decrease in consumption of gas
In connection with world financial crisis the Russian consumers have lowered gas consumption. If growth of demand for gas doesn’t renew, the company should correct plans on extraction. In the conditions of surplus of the offer of the price for gas can appear considerably below expected.
Impossibility of export of gaz
Export of gaz from Russia is legislatively fixed to “Gazprom”. Other gas companies have no possibility to deliver gas for export.
Conclusion
World financial crisis has struck serious blow to ambitious plans “Novatek”, having caused decrease in consumption of gas. Nevertheless, company position remains stable. With restoration of demand for gas “Novatek” considerably will improve financial indicators.