Inter RAO has been engaged in talks with Gazprom Energy Holding for exchanging assets, whereby the company would stand to receive Gazprom’s controlling share in Kalingrad TETS-2, a power and heat plant in the outlying Russian region on the coast of the Baltic Sea. The exchange will not involve the transfer of cash.  

While it has not yet been announced what Gazprom will get in return for the transfer of its investments in the building of new blocks of Kalingrad TETS-2, Inter RAO is expected to transfer to the oil company assets of equal value. In all likelihood, Gazprom will receive shares of stock issued by Inter RAO.

A branch of Inter RAO, Kalingrad TETS-2 has a generating capacity of 450 megawatts. A second generating unit that will have the same capacity is currently undergoing construction.

Inter RAO and Gazprom have also talked about forming a joint venture to operate the power plant. It was anticipated that Inter RAO would contribute to the venture the plant’s existing operating block, receiving 49 percent. Gazprom’s contribution in this arrangement would come in the form of its investment in the building of the second block.

At the present time, 100 percent of Kalingrad TETS-2 and its only generating block are the property of Inter RAO. The new block undergoing construction with an estimated price tag of RUR 22.3 billion belongs to Gazprom. 

Gazprom and Inter RAO have discussed the plans for the exchange of the assets for more than one year. The parties were planning to finalize the transaction by the end of 2010. Still, if Gazprom decides to take Inter RAO’s shares in exchange for the transfer of assets, the completion of the transaction will be delayed until the additional shares are issued. Inter RAO expects to conduct the placement of 13.8 trillion shares in late 2010 or early next year.   

The value of assets Inter RAO will acquire in the placement transaction will be at least USD 6 billion, although it could well be as much as USD 10 billion.