Page 9 - FSUOGM Week 46 2019

FSUOGM PERFORMANCE FSUOGM
Gazprom Neft keeps positive cash flow in 3Q19
RUSSIA
GAZPROM Neft, the oil arm of Russian gas giant Gazprom, posted 5% quarter-on-quarter increase in revenues in 3Q19 under IFRS despite the 10% q/q Brent oil price decline due to 11% q/q increase in crude and 9% q/q increase in refining output.
Gazprom Neft’s earnings matched expecta- tions by remaining flat q/q at $2.6bn, with the positive sales trends being undercut by lower price and higher export duty q/q given higher output at non-tax exempt fields, BCS Global Markets commented on November 19.
The company’s bottom line in the reporting quarter slipped 2% q/q to about $1.6bn, sup- ported by $33mn foreign currency gain, while free cash flow remained positive at $550mn (albeit shrinking 2-fold q/q) on $595mn divi- dends received from Arcticgas.
“As a result of positive free cash flow (FCF)
and ruble weakening at the period end on the one hand, and c$611mn interim dividends pay- ment on the other, net debt declined 4% q/q to c$7.5bn,” BCS GM estimated.
In June, Gazprom Neft unveiled its 2030 strategy and pledged to increase the dividend payout gradually to 50% of net profit over 2019- 21. For 2018 overall Gazprom Neft doubled the total dividend payout to RUB142bn, or 37.8% of IFRS net consolidating profit.
The company set new strategic targets, plan- ning to double its gas output to 60bn cubic meters annually; to optimise its Ebitda per tonne of oil (up by 10% in upstream extraction, double in the downstream refining segment, and dou- bling in retail segment); to boost its technology and safety leadership, expecting the technology gains to help boost the output by 50mn tonnes of hydrocarbons by 2030.™
POLICY
Poland notifies Gazprom of plan to end gas supply deal after 2022
POLAND
Poland was required to give Gazprom three years’ notice.
POLAND’S main gas company PGNiG said on November 15 it had notified Russia’s Gazprom that it did not intend to extend their long-term deal on gas supplies when it expires at the end of 2022.
Poland has said before it wants to stop buy- ing gas from Gazprom on a contractual basis after 2022, relying instead on LNG imports and gas deliveries via a new pipeline from Norway it is developing. But its agreement signed with Gazprom in 1996, known as the Yamal contract, requires that the pair formally submit declara- tions regarding future co-operation three years before the deal terminates.
“Over the past four years we have taken a number of important steps to diversify the sources of natural gas supply to Poland,” PGNiG president Piotr Wozniak said in a statement. “We have concluded long-term LNG supply contracts and have been acquiring natural gas deposits on the Norwegian Continental Shelf [NCS], which, combined with the activities of the transmission
system operator to expand the gas pipeline sys- tem, makes it possible for us to terminal the Yamal contract on the originally set date.”
Poland opened its first LNG import terminal, a 5bn cubic metre per year facility in Swinoujs- cie, in late 2015. The terminal has seen record use this year, partly because of low international LNG prices, taking ashore 2.48 bcm of gas in Jan- uary to September, up 27% year on year. These supplies covered 23% of Polish demand over the period, versus 18% a year earlier.
In contrast, Russian imports fell 21% in the first nine months of this year, totalling 6.29 bcm. They met 58% of Polish consumption, compared with 75% in the same period a year earlier.
Plans are underway to expand the Swinoujs- cie plant’s capacity to 7.5 bcm per year by 2021 as well as construct another 4 bcm per year import terminal in Gdansk. Poland’s Baltic Pipe project should also be up and running by 2022, carrying up to 10 bcm per year of gas from PGNiG’s fields off Norway to Poland via Denmark.™
Week 46 20•November•2019 w w w . N E W S B A S E . c o m P9