Page 127 - RusRPTMar21

Gazprom cut its exports via Ukraine by 20% on Wednesday, 17 February, to 94.9mmcm per day and by 26% to 88.2mmcm per day on Thursday, 18 February. Both cuts are compared to the recent “more normal” level of 119mmcm per day from 1-16 February. In January, daily exports averaged 124.5mmcm per day, and this number was at 182.6mmcm per day in December 2020. Gazprom is required to export 40bcm via Ukraine this year, which averages to 110mmcm per day.
Gazprom Neft’s 4Q20 IFRS results came broadly in line with consensus on the EBITDA level (1% above), but slightly beat both us and the market on the bottom line. Despite the hike in capex in 4Q20, FCF remained in positive territory for both 4Q20 and FY20, thanks to a working capital release of $1.1bn in 4Q20. Overall, we deem the numbers as neutral.
The key highlights from conference call are the following.
· The capex surplus vs. the guidance of RUB370-380bn was driven by the decision not to postpone value-creating projects. Capex and production for 2021 are guided at roughly the 2020 level (subject to OPEC+ restrictions).
· Refining capex in 2021 is likely to be on par with 2020. The plan had been to reduce it, but the company shifted some capex from 2020. The upgrade programme at the Omsk refinery will likely be completed by 2022, with the refining capex going down afterwards. And in 4Q20, the company launched a deep processing unit at its NIS refinery.
· The company targets positive FCF in 2021, but a compromise between capex and positive FCF is possible.
· The company has transferred the East-Messoyakhskoye field, as well as around 20 depleted fields, to EPT (all of its depleted assets, except for Muravlenkovo, which has a high gas factor).
· The adjusted net income number for the 2020 dividend calculation was not disclosed. The company confirmed that it would not adjust FY net profit down and would likely repeat the adjustments made in 9mo20. The final decision on dividends has not been made.
· The launch of the gas infrastructure at Novoportovskoye in late 2021-early 2022 will make it possible to develop the adjacent acreages. Discussing E&P plans in the Arctic, management also highlighted the Enisei exploration project (a JV with Shell) on the Gydan peninsula.
127 RUSSIA Country Report March 2021 www.intellinews.com