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13 September 2011
Gazprom Neft to sign new deal on Elephant project - sources

MOSCOW. Sept 13 (Interfax) - Russia's Gazprom Neft (RTS: SIBN) and Italy's Eni will sign a new agreement on the former's involvement in the Elephant project in Libya during the economic forum in Sochi on September 16, sources at Gazprom (RTS: GAZP) told Interfax.

The companies signed documents ion the ale of the asset in February, just before the rebellion broke out in Libya, preventing it from being ratified by the government. The change of power in Libya cast doubt on whether the new regime would be prepared to do with business in Russia.

It is now expected that the companies will sign not a purchase-sale deal but a call option to buy a stake in Elephant, as it is not clear what state the asset will be in following the civil war.

The asset's baseline value is still $163 million, one source said. That value will fall by the extent of any damage inflicted by the hostilities and by lost profit for the period during which the deal was frozen.

Alexei Miller, the chairman of Gazprom Neft's board of directors, will sign the agreement.

Gazprom did not make official comment.

Gazprom and Eni signed a strategic partnership agreement in November 2006, under which Eni has entered into the Severenergia project in Russia and was due to sell Gazprom some of its assets outside Russia in return.

The Elephant field, which went commercially on stream in 2004, is located 800 kilometers south of Tripoli. The project is being carried out by a consortium of Eni (66%) and Korean National Oil Corporation (33%) and NOC. Gazprom Neft was to have received a 33% stake in the multinational consortium.