Gazprom Ends Its Drive to Control SUEK

Gazprom said Monday that it ended a bid to gain control of the country's biggest coal producer, Siberian Coal and Energy Company, because of "uncertainty" in the energy market.

Gazprom units are withdrawing an application to the Federal Anti-Monopoly Service to buy 50 percent plus one share of Siberian Coal, also known as SUEK, the gas producer said in an e-mailed statement.

The transaction would have created the country's largest electricity producer, after this month's breakup of Unified Energy System, and the biggest coal supplier to power plants. The proposed company would have had 30,500 megawatts of capacity in 10 time zones. Deloitte & Touche valued the new company at about $16 billion, Kommersant reported Nov. 28.

"Uncertainty of electricity market dynamics and capacities" meant the energy producers couldn't reach an "accurate" potential value for the new company, Gazprom said.

One reason for ending the deal was President Dmitry Medvedev's comments that investors would not welcome such a significant part of the energy market returning to the state after UES's breakup, Kommersant reported Monday.

Gazprom and SUEK will continue long-term cooperation after signing an agreement on a "strategic partnership," Monday's statement said. The two companies plan to work together on modernizing and building power plants, as well as on drafting coal-generation and other projects.