Igor Artemiev on the results of a meeting of the Government Commission on Foreign Investments
The short-hand notesof a briefing of the Head of the Federal Antimonopoly Service (FAS Russia) Igor Artemiev at the end of a meeting of the Government Commission on control over foreign investments on 24 March 2016.
Igor Artemiev: The meeting is the Government Commission on Control over Foreign Investments in Strategic Sectors of Russian Economy, chaired by Prime-Minister Dmitry Medvedev, is over.
First of all, I would like to say, and the Commission stated it, that since the beginning of the year we have already received 11 interesting petitions for such transactions on control over strategic assets in the Russian Federation. In particular, they were filed by companies from Japan, the US, Norway and Cyprus to purchase companies that offer services in Russian ports, are involved in pharmaceutical business, use of equipment for nuclear installations, printing equipment, use of subsoil. It means that overall since 1 January 2016 we have been observing an increase in petitions filed by foreign investors from various countries with regard to the strategic assets of the Russian Federation.
Today the Commission considered several transactions where the largest, and undoubtedly, exceptionally strategically important for the Russian Federation is an Indian state oil company ONGC acquiring 15% shares of a Russian strategic user of subsoil resources – “Vankorneft”.
As you know, “Vankorneft” is a 100% subsidiary of “Rosneft” and it is the largest field opened in Russia in the past 25 years.
Talking about the key parameters of the field that will be developed jointly by Russia and India, it has around 500 million tons of oil and approximately 182 billion m³ of gas – only in this single field.
As a result of the transaction, India will pay about US$ 1.3 billion for the “Vankorneft” shares. We also know that top management of “Rosneft” has recently signed a preliminary agreement with India on buying an additional package of “Vankorneft” shares for some other fields.
Generally speaking the situation can be characterized as follows: previously the money for the largest strategic fields in Russia was coming from some other countries, you know well which ones; now, quite recently… We informed you about the transaction with “Yamal SPG” when China invested billions of dollars; in this case we talk about India and our cooperation in the economic field. The Commission has supported the transaction; the Indian Government supported it some time ago so in the near future it will be completed.
The second transaction I would like to discuss concerns a Russian strategic company – “Geotekhnologia” based in Petropavlovsk-Kamchatsky. Why is it a strategic one? The company has licenses for a number of fields with considerable resources of nickel, copper, cobalt ores, they have gold, silver, platinum, but the most important is that they have the second most significant nickel deposit in the Russian Federation. The first most important one belongs to “Norilsk Nickel”; the second is in Kamchatka, in special conditions. It is controlled by “Geotekhnologia”.
A Swiss company “Molumin AG” controlled by Swiss citizens intends to acquire 100% of “AMP”, which, in its turn possesses and intends to sell 75% of – “Geotekhnologia”. Simply speaking, 75% shares of “Geotekhnologia” are on sale. Today the Government Commission also approved the transaction. Certainly, developing this ore-and-mining complex in Kamchatka in view with environmental restrictions, specified by the Ministry of Natural Resources in their opinions, is exceptionally important for development of Kamchatka because it is a large field and it should work.
These are the two transactions that were the largest today. Others, smaller, perhaps are not worth mentioning today.
Also in the near future 11 transactions will be submitted to the Government Commission representing the fields that I already mentioned.
Q: Would you, please, specify: do these 11 transactions include transactions between Indian companies and “Rosneft”?
Igor Artemiev: No, it’s without them. I said “11” having in mind that these are different transactions. There are also transactions that concern “Rosneft” and Indian investors, they will be considered separately. There are a number of interrelated transactions; three, if I am not mistaken.
Q: When will they be considered?
Igor Artemiev: When the documents are submitted. After everything was signed as preliminary contracts, with a reservation that the contracts on purchasing additional shares come into force only after approvals by the Government Commission and the Federal Antimonopoly Service, we expect to receive the packages of documentation in the near future. They immediately will be considered with all federal executive bodies and presented to the Government Commission.
Thus, we may say that we are working on around 15 such transactions, which is a lot. Even in quieter times we received significantly less than 15 transactions per quarter. I believe that investors, who desisted from any actions and movements under the conditions of political and economic uncertainty, started making serious decisions in Q1 2016 and approach the Commission. They desire to invest their money in strategic assets of the Russian state – it is a very good signal.
Q: Do I understand it correctly that these 15 transactions can be considered at the next session of the Commission?
Igor Artemiev: I do not know if we will be able to go through all 15 transactions, because typically the Commission considers transactions already coordinated with all authorities, and if something is not approved, it is just one body. Some issues we need to postpone in order to obtain additional documentation, additional information about off-shores so I cannot say that all 15 will be at the next Commission, but they certainly will be discussed in the near future.
Q: Many countries are represented, companies from those countries … Is it possible to say that the interest of foreign companies, particularly, from the US, is not fading?
Igor Artemiev: You know, let’s wait a little bit how things develop because last thing one wants to do is to mistake the wish for the reality. I am giving you a fact: in Q1 2016 we received more petitions that in 2015. Does it mean something? Yes, probably it means something, but what exactly – let’s see what is going to happen by June, by September. Certainly, such information is reassuring because of the transactions in question: today we have considered a transaction for billions of dollars; Yamal is also for billions of dollars, additional Indian transactions – again billions of dollars. These are very serious things, this is development of entire regions, huge agglomerations, causing a gigantic multiplier effect, so these are such fields and transactions that with time can become the champions of the Russian economy, and it is very good.
Q: Mr. Artemiev, tell us, please, if there is a petition from Chinese “Sinopec” regarding the Eastern Petrochemical Company among the filed petitions?
Igor Artemiev: I can’t say anything about it so far. If there is such a petition we will soon report about it.
Q: They said earlier about Bystrinsky Mining-and-Ore Works that China plans to purchase 13%. Today Vladimir Potanin said that the figure can go up to 20%. Should this transaction be considered by the Legal Commission?
Igor Artemiev: If fact, there is a 25% limit for everything that concerns subsoil when state companies are involved, which is typically a case for China or India, unless otherwise specified in an international treaty. So certainly, if it is about 20% … If it concerns federal subsoil – the largest deposits, it must be considered by the Commission. But these will be pleasant efforts, and if, for instance, “Norilsk Nickel” will join, it will be very good.
Q: So it will be necessary?
Igor Artemiev: Yes. It will be necessary. We must look at the documents, however, we need sets of documents rather than oral information. We’ll look at them and then give you a final opinion, but in my view, it will certainly be necessary.