Page 15 - FSUOGM Week 43

FSUOGM PROJECTS & COMPANIES FSUOGM

Rosnedra opens tender for Gydan gas block

RUSSIA RUSSIAN subsoil licensing agency Rosnedra Rosneft CEO Igor Sechin said in a forum
has opened a tender for subsoil rights to the earlier this month that the company was look-
Rosneft and Novatek Zapadno-Minkhovsky gas block on the Gydan ing to export 35-50mn tonnes per year (tpy) of
are likely to be vying for Peninsula, it announced on October 21. LNG from the Arctic as part of its Vostok Oil
the block. Zapadno-Minkhovsky spans part of Gydan venture. Authorities recently revealed that Ros-
and part of the Taz Bay. According to Rosne- neft was the only company cleared to take part
dra, it contains 329.5bn cubic metres of gas and in an upcoming auction for the nearby Deryab-
27.2mn tonnes (245mn barrels) of condensate in inskoye and Kazantsevskoye gas fields in north-
possible resources. ern Krasnoyarsk.
Bids will be accepted until November 20, with Rosneft has been trying to develop LNG
the starting price set at RUB124.2mn ($1.6mn), projects for years without success. It abandoned
Rosnedra said. Results will be announced on plans for the Pechora LNG terminal in the far
December 16. northern Nenets region in 2018 after determin-
The winner will obtain a 30-year licence to ing there were not enough resources in the area
explore for and produce hydrocarbons in the to justify its development. Its Far Eastern LNG
area. There are no special conditions set for the project has been in limbo for a decade for the
auction, meaning any operator with proven same reason.
capabilities can apply. Novatek, the only active LNG producer in
Russia’s Kommersant reported in Septem- the Russian Arctic, may also come forward
ber that Rosneft was interested in acquiring the with an offer for Zapadno-Minkhovsky. The
block. The national oil giant operates the adja- company already has the resources to under-
cent Minkhovsky area containing 210 bcm of pin its Arctic LNG-2 terminal on Gydan, due
gas, which it acquired in 2014. It is looking to on stream in 2023. But it wants to develop
build up its gas resources in the Russian Arctic another export project on the peninsula, Arc-
to establish a hub for LNG production. tic LNG-1. ™

Naftogaz postpones eurobonds

UKRAINE NAFTOGAZ of Ukraine (NAFTO) officially awful Naftogaz interim financials. However, in
confirmed on the evening of October 20 that it our view, what really scared Naftogaz’s potential
"A series of negative has decided to postpone the placement of dol- bondholders was the bad timing of the place-
news" has made lar eurobonds, referring to “a series of negative ment (as we highlighted on October 15). The
investors think twice, news” that had made international investors obvious reaction of creditors to such a poorly
according to Naftogaz. “more and more concerned about the political timed attempt is to demand a higher interest
and operating environment in Ukraine.” Among rate. In our view, Naftogaz’s decision to put off
the reasons to postpone the deal, company CFO the deal looks logical. As natural gas prices are
Peter van Driel listed the recent allegations of the rising, the company has a chance to improve its
State Audit Service of Ukraine (which allegedly P&L in 2H20. Meanwhile, Ukraine will have
found multi-billion discrepancies in Naftogaz a chance to secure another IMF tranche and
accounts), some corporate governance issues reduce its sovereign risk. If so, Naftogaz may
and “the development of relations with the IMF,” have a new window for a bond placement at a
implying a negative turn. better rate in 1H21.™
Recall, on October 14, Naftogaz reported on
its intention to buy back its eurobonds maturing
in 2022 and 2024 for a maximum par value of
$335mn, if it’s able to place a longer eurobond.
Later on, the company initiated the placement of
a $500mn eurobond maturing in February 2027.
As of October 19, media reported that the place-
ment rate of the new bonds would be 8.95%.
An analyst at the Kyiv-based Concorde
Capital brokerage said in a research note: "The
explanation offered about the bond placement's
failure isn't convincing. All the 'reasons' were
known well ahead of the company’s attempt
to place the bond. To the mentioned 'reasons',
we would add more weighty evidence, such as

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