Total adds to Novatek stake, pays $800 million for 2%

December 12, 2011

France's Total SA (FP) bought 2 percent of OAO Novatek (NVTK) for about $800 million, boosting its stake in Russia’s fastest-growing gas producer to 14.1 percent.

Total said Monday that it bought the shares from Novatek’s two main shareholders. Chief Executive Officer Leonid Mikhelson and billionaire partner Gennady Timchenko control Novatek, Russia’s biggest independent gas producer.

Novatek, which said Monday that it plans to double gas production by 2020, in March picked Total as a partner for its Arctic Yamal LNG project. The two billionaires at the same time sold 12 percent in Novatek to Total for about $4 billion. The Paris-based energy producer may increase its stake in Novatek to 19.4 percent within three years under the accord.

Total owns 20 percent of the Yamal LNG project, which is set to start production of liquefied gas for transportation by tanker at the end of 2016.

Novatek is seeking to supply the fuel to Europe, Asia and South America via transshipment, according to a presentation on the producer’s website. Total will finance about 35 percent of Yamal LNG costs via contribution to charter capital, and about 30 percent via shareholder loans, according to the presentation that put Novatek’s total investments at about $18 billion to $20 billion. The Russian company aims to bring in more partners, and project financing will also be used.