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IFC Invests in Russia’s Largest Independent Gas Producer


In Washington
Hannfried von Hindenburg

Phone: (202) 458-5613

Email:  
hvonhindenburg@ifc.org


Washington, D.C., May 26, 2005 – The International Finance Corporation, the private sector financing arm of the World Bank Group, signed an agreement today to acquire a one percent stake in OAO Novatek, Russia’s leading independent gas producer.


This is IFC’s first investment in Russia’s natural gas sector, which is otherwise dominated by the gas giant Gazprom.  Novatek and other independent gas producers have begun contributing significant volumes to the domestic market in the past few years.  The investment in Novatek is part of IFC’s support for independent gas producers in the country. Developing gas and similar clean fuels is also in line with IFC’s overall strategy for extractive industries.


“IFC hopes to encourage more investments in Russia’s gas sector through this investment.  We hope the market sees this as a sign of our confidence in the role that domestic producers can play in the country’s energy strategy,” said Rashad Kaldany, IFC’s Director for Oil, Gas, Mining, and Chemicals.  Edward Nassim, IFC’s Director for Central and Eastern Europe, added, “IFC has increased its investments in the Russian Federation in recent years, in particular with locally owned companies.  We are now looking toward investments that support sectors with significant development impact.  This includes developing the country’s natural gas resources.”


With 574 billion cubic meters of proven gas reserves at the end of 2003, Novatek has emerged as a significant independent gas producer.  It plans to continue increasing gas and liquids production and extracting value from its own downstream operations.  The company is currently listed on the RTS in Moscow and the Moscow Interbank Currency Exchange, and it adheres to international financial reporting standards.  “Novatek welcomes IFC as a shareholder and looks forward to a long-term partnership,” said Leonid V. Mikhelson, Chairman of Novatek’s Management Board.


Since Russia became a member in 1993, IFC has invested $1.9 billion there for its own account, plus an additional $292 million in syndicated loans, in about 100 projects across a variety of sectors. IFC investments are spread across Russia’s most important sectors, including banking, leasing, housing finance, infrastructure, mining, agribusiness, pulp and paper, construction materials, oil and gas, telecommunications, information technologies, retail, and health care.


The mission of IFC (
www.ifc.org) is to promote sustainable private sector investment in developing countries, helping to reduce poverty and improve people’s lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, helps clients improve social and environmental sustainability, and provides technical assistance and advice to governments and businesses. From its founding in 1956 through FY04, IFC has committed more than $44 billion of its own funds and arranged $23 billion in syndications for 3,143 companies in 140 developing countries. IFC’s worldwide committed portfolio as of FY04 was $17.9 billion for its own account and $5.5 billion held for participants in loan syndications.