Gazprom has cash waiting for TNK-BP gas field

Gazprom says it has the money to buy the Kovykta gas field from owners TNK-BP. The state-controlled energy giant says it will not need to borrow to make the purchase. Despite being in debt to the tune of US$ 37 billion, experts say Gazprom has enough cash

Gazprom has accumulated massive debt after aggressive acquisitions over the past two years, including a share in the Sakhalin-2 gas project and power generating assets.

The billion-dollar Kovykta gas field is near the top of the list of Gazprom’s possible purchases.

Gazprom’s deputy CEO, Andrey Kruglov, says it’s not a matter of money, but getting an agreement.

“We don’t need to attract any loans. We're ready to pay for it whenever our negotiating parties and colleagues are ready,” said Kruglov.

It seems that Gazprom isn't planning any large acquisitions till the end of the year and won’t attract significant loans.

“The volume of Gazprom's net debt of 37 billion dollars may decrease slightly by the end of 2008. We plan to refinance or redeem with our own funds the bulk of loans raised in 2007,” said Kruglov.

Market watchers say even if the company doubles its net burden it won’t undermine its credibility as a borrower.

“Amid growing energy prices, Gazprom’s net profit this year may reach 30 billion dollars and EBITDA of 45 billion. A borrower is regarded as reliable if its debt to EBITDA ratio is two to one. So Gazprom could borrow twice as much,” says analyst Denis Borisov.

However, experts warn Gazprom may face problems with refinancing if the global liquidity crisis worsens. They see a debt of around 25 billion dollars as an optimal level for the company in the current market environment.