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. Last Updated: 07/27/2016

Gazprom in $1.7Bln Loan Deal

Gazprom borrowed $1.75 billion from Western banks in December, the gas giant said Monday.

Gazprom borrowed $1.35 billion from Deutsche Bank and $200 million each from J.P. Morgan and ABN Amro, Gazprom said in its earnings report for the first three quarters of 2004.

A source familiar with the situation said the $1.75 billion loans were raised for Gazpromneft's deposit in the government auction of Yuganskneftegaz.

Yet after Gazpromneft backed out of the bidding as a result of a temporary stay against the sale issued by a Houston court, the funds went towards buying Rosneft interests in Arctic shelf projects. The sum included 6.29 billion rubles ($224 million) for Rosneft's share in the Shtokman and Prirazlomnoye fields and 44 billion rubles ($1.6 billion) for an agreement to buy securities in Sevmornefetgaz, the source said.

A Gazprom representative said Gazprom moved in to take over Rosneft's interests in Arctic projects to shield them from legal liabilities.

"Ventures in shelf projects such as the Shtokman field are extremely important for us for building relations with U.S. companies and for starting work in the LNG market. When Rosneft came under threat of legal action, it was principally important for Gazprom to take over these projects," he said.

Yukos said this month it was suing Gazprom, Gazpromneft, Rosneft and Baikal Finance Group for more than $20 billion for what Yukos called the expropriation of Yugansk.

In the report, Gazprom said net profit rose 9 percent to 137.9 billion rubles in the first nine months of 2004, while sales rose 14 percent to 683.3 billion rubles compared to the same period a year earlier.