EuroChem Rewarded For Its High Level of Corporate Disclosure

The total value of the transaction on a cash-free, debt-free basis is RUB 12.7bn, or approximately USD 403 million at the current exchange rate.

The assets have a combined annual production capacity of approximately 1.1 billion cubic meters of natural gas and 220 thousand tonnes of gas condensate with aggregate total proven and probable reserves of 50 billion cubic meters of natural gas as well as 32 million tonnes of recoverable oil reserves.

Commenting on the transaction, Dmitry Strezhnev, EuroChem CEO, said “The idea of partially back integrating into natural gas production had been in the pipeline for some time. This is a very unusual move by a nitrogen fertilizer producer, but it will counter the effects of rising natural gas costs in Russia by providing a boost to our ammonia gas efficiency and strengthen our cost advantages”

EuroChem converts natural gas and atmospheric nitrogen into ammonia, which is the primary raw material for its nitrogen-based fertilizer production. Severneft-Urengoy’s current natural gas production capacity represents up to 25 per cent of EuroChem’s annual gas consumption. For the production of nitrogen-based fertilizers, EuroChem operates the Novomoskovskiy Azot and Nevinnomysskiy Azot nitrogen plants in Russia.

The transaction, which was approved by the EuroChem Board of Directors, received regulatory clearance from the Federal Antimonopoly Service of the Russian Federation (FAS).

K&L Gates acted as EuroChem’s legal counsel at different stages of the transaction.