Page 71 - RUSRptAug18

9.2 Major corporate news 9.2.1 Oil & gas corporate news
Russian natural gas giant Gazprom will pay higher mineral extraction tax (MET) after the State Duma passed respective amendments to the Tax Codex, Vedomosti d aily said on July 5. Previously the Finance Ministry and the government set out to raise additional RUB72bn ($1.12bn) for the budget from Gazprom to compensate for the low dividends Gazprom paid out in 2017. Gazprom, at the peak of its investment cycle with such projects as Nord Stream 2, Power of Siberia (Sila Sibiri), and Turkish Stream pipelines, will 26.6% of IFRS net profit for 2017 instead of the 50% demanded by the ministry from the state companies . Analysts saw possible tax increases for Gazprom as negative, especially since Russian budget is set to post a record-high surplus on the back of higher oil prices.
One of Russia's largest oil companies Surgutneftegas (Surgut) reported second-quarter Russian Accounting Standards (RAS) financials , according to, which the company's infamous cash pile grew 11% quarter-on-quarter to RUB2.7 trillion ($44bn). The company's net income was up 101% year-on-year to RUB309.4bn on foreign currency gains. Surgut is often said to be the only Russian company with no debt and is notorious for its cash pile, which amounted to RUB2.2 trillion as of the end of 2017 . "Our FY18 net income forecast of RUB450bn is based on a YE18 RUB/$rate of RUB61.6, resulting in 2018 dividends of RUB4.14/preferred share and RUB0.65/common share, representing yields of 12% and 2%, respectively,” Renaissance Capital estimated on July 27. However, despite the high dividend yield, the RenCap analysts remind that the "investment case on Surgutneftegas is marred by the still unexplained disappearance of 17.6bn of its treasury shares (representing 40% of its share capital and currently valued at $9.3bn) between 2001 and 2010."
Russia's second-largest natural gas producer with ambitious liquefied natural gas (LNG) growth plans Novatek posted strong earnings and cash flow in the second quarter of 2018 . The company's revenues gained 52% year-on-year to RUB195.8bn in line with expectations, with Ebitda jumping 59% y/y to RUB69bn ($1.1bn) and an Ebitda margin of 35.2% (+4pp q/q and +2pp y/y). Previous operational results already anticipated strong financials in the second quarter, with the main drivers of the growth being gas assets acquired from Russian diamond major Alrosa, as well as the ramp-up at the Yamal LNG (liquefied natural gas) plant, with the first train of the project remaining operational in the second quarter. Novatek's cash flow was up 48% y/y to RUB47.3bn in the second quarter, with cash flow growth offset by higher capex up by 102% y/y to RUB14.6bn, channeled mostly to the Arctic LNG-2 project.
The second line of the Yamal LNG plant might start producing liquefied natural gas (LNG) in the first week of August , Vedomosti reports, citing the Chairman of Novatek Board, Leonid Mikhelson. The third line of Yamal LNG is expected to be launched in December, according to the paper. Our View: The latest company guidance was for the second line to be launched in September-October, while the start of the third line was planned for December 2018 - January 2019. Thus, we see the second line starting some three months ahead of schedule, which might have a positive impact on Novatek’s
71 RUSSIA Country Report August 2018 www.intellinews.com