German EON sells Gazprom stake for 3.4 billion euros

1st December 2010, Comments 0 comments

Germany's EON said Wednesday it had sold its 3.5-percent stake in Russian gas giant Gazprom to Russian bank Vnesheconombank and on the open market for a total of 3.4 billion euros (4.4 billion dollars).

"The sale of our Gazprom stake does not alter our Russia strategy. EON will remain an active investor in Russia in both power and gas," EON chief executive Johannes Teyssen said in a statement.

EON's purchase of a stake in Gazprom was seen as being part of closer economic ties between Russia and Germany under former chancellor Gerhard Schroeder, but relations between Moscow his successor Angela Merkel are seen as less cosy.

The stake was held by EON's subsidiary EON Ruhrgas, which built up 6.4 percent interest in Gazprom between 1998 and 2003 before exchanging 2.9 percent for a stake in the Yuzhno-Russkoye gas field in Russia.

The German utilities group said it sold a 2.7-percent stake to state-owned Vnesheconombank and 0.8 percent on the stock market. The sale forms part of its plan to offload 15 billion euros in assets by 2013.

"The purchase of Gazprom shares more than 10 years ago served to further solidify the partnership between Gazprom and Ruhrgas and to expand the two companies scope for collaboration," Ruhrgas head Klaus Schaefer said.

"The sale will in no way alter the continued solid partnership," he said.

"In the future, we will continue to procure considerable amounts of Russian natural gas for the German and European markets and to work together closely on a number of joint projects."

Gazprom, founded in 1989, grew out of the USSR's Gas Industry Ministry and was part-privatised from 1993 in the much-criticised sale of state assets in post-Soviet Russia.

The state has retained a controlling stake of just over 50 percent, according to the company's website.

It has ramped up its ambitions in recent years and is expecting to sign a potentially huge deal to supply natural gas to China by mid-2011.

Gazprom reported last month first-half net profits of 508.2 billion rubles (16.5 billion dollars), a rise of more than 66 percent, on sales 1.7 trillion rubles.

EON, the world's biggest private utilities group, said it will book a gain of 2.5 billion euros from the sale, which will be used to reduce debt and invest in other areas.

Last month EON announced a major strategy shift, deciding to turn its focus away from Europe in favor of what it sees as more lucrative emerging markets in Asia and South America.

© 2010 AFP

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