Page 11 - FSUOGM Week 19 2021

FSUOGM POLICY FSUOGM

Gazprom outlines ESG targets

RUSSIA RUSSIA'S natural gas giant Gazprom outlined "Although we do not think that Gazprom’s
its ESG targets at the special session covered (including the Gazprom Neft’s) ESG session is
Gazprom will link by VTB Capital (VTBC) analysts in a report of likely to drive any immediate stock reaction, we
management KPI to April 30. believe the importance of such events must not
delivering on CO2 As followed by bne IntelliNews, under grow- be underestimated given the increased demand
reduction targets. ing ESG pressure, Russian state-controlled Ros- for quality ESG from financial investors," VTBC
neft and private Lukoil oil and gas majors are analysts commented.
pledging to deliver green strategies. VTBC therefore welcomes the company’s
Gazprom pledged to link 20% of manage- decision to improve its disclosure and transpar-
ment's KPI programme, planned for intro- ency, while affirming a Buy call on the company's
duction next year, to be linked to specific CO2 shares.
reduction targets, while 80% will likely be linked The analysts also see Gazprom as well posi-
to financial indicators. tioned for the ongoing hydrogen theme expan-
Current KPIs include an 11.2% reduction in sion. "While this is not something that will
CO2 equivalent emissions in the gas business materialise physically in the short term, it will
by 2031 (compared with 2018). Gazprom now still be an important contributor to the compa-
spends some RUB50bn ($0.7bn) for environ- ny’s fundamentals," VTBC believes.
ment-related projects a year (only slightly up The company could benefit from existing
from RUB49bn in 2020). facilitates and infrastructure, as well as its com-
In the hydrogen field, Gazprom is studying petence and, importantly, its significant resource
several technologies, including methane pyrol- base in the hydrogen segment.
ysis and hydrogen generation from hydrogen Last month the analysts at VTBC revised
sulphide, while the company is also conducting the recommendations on Russian oil and
research on hydrogen storage and shipment gas stocks incorporating an environmental
infrastructure. "E-premium" into the valuations. "The ESG
The company's oil arm, Gazprom Neft, aims wave is rising higher and moving faster, creat-
to reach a 45% share of gas in its total hydrocar- ing challenges for the oil industry well beyond
bon production by 2024-26, which will improve the commonly discussed Carbon Border Tax,"
its carbon footprint. VTBC noted. ™

Week 19 12•May•2021 www. NEWSBASE .com P11