Alrosa, Russia’s state-run diamond giant, has announced that it is selling two oil and gas assets to VTB, its main creditor, for $620 million.

According to analysts, the assets are worth a third of the price, turning the deal into a state bailout for diamond miner Alrosa as it struggles to pay out its debts.

The Moscow Times states that VTB’s investment arm, VTB Capital, is advising Alrosa on the complex transaction.

Diamond miner Alrosa did not say which assets had been sold but they are believed to be the Urengoi Gas Company and Geotransgaz, which VTB earlier agreed to buy if Alrosa promised to buy them back.

Alrosa sustained a net loss of 32.6 billion rubles in 2008 against a net profit of 16 billion rubles in 2007. The diamond mining giant attributed the loss to the fact that its debt is fixed in dollars and to a drop in the price of forward foreign currency contracts it had signed. The company’s debt has almost doubled to 115.5 billion rubles from about 60 billion rubles.