Alrosa Decides Against Taking Oil, Gas Firm Stake

Russian diamond monopoly Alrosa has gone against the recommendation by its major shareholders - the Russian federal government and the government of Sakha (Yakutia) - and decided not to invest in oil and gas company OAO NNGK Sakhaneftegas.

Earlier this year the government of the Republic of Sakha proposed to Alrosa management that it consider the acquisition of the oil and gas assets owned by Sakhaneftegas, and primarily its stake in OAO Yakutgasprom.

As a result, Alrosa began exploring the investment possibility started talks with several parties, including representatives of Sakhaneftegas shareholders.

Alrosa's long-term development strategy includes diversification of its activities and the firm already operates in the oil and gas industry through its ZAO Irelyakhneft and OAO ALROSA-Gas units.

Alrosa said that although talks with Sakhaneftegas shareholders representatives were successful, the company's management raised an issue regarding Yakutgasprom shares which would lead to the loss of control over it by Sakhaneftegas and, as a result, cause material a loss to Sakhaneftegas shareholders.

Alrosa said it could not enter a deal that would lead to lawsuits by current Sakhaneftegas shareholders and demands that it repay the liabilities not only of Sakhaneftegas but also Yakutgasprom.

Alrosa is the second-largest diamond miner in the world, providing around 23 percent of global supply.