Page 94 - RusRPTSept20

9.2 Major corporate news 9.2.1 Oil & gas corporate news
● Gazprom
Gazprom said on August 28 that pretax profit fell 82% in the second quarter on the back of falling oil prices and energy consumption due to the coronavirus pandemic. The Russian oil-and-gas company said pretax profit dropped to 25.4bn Russian rubles ($339.0mn) in the three months to June 30, from RUB137.4bn a year earlier. The company attributed the collapse to lower prices for oil and oil products on both international and domestic markets over the period, coupled with a drop in demand for energy resources. Revenue fell to RUB398.3bn from RUB610.5bn, Morning Star reports. Earnings before interest, taxes, depreciation and amortization–one of the company’s preferred metrics, which strips out exceptional and other one-off items–fell to RUB66.6bn from RUB189.9bn. Hydrocarbon production, including shares in joint ventures, declined to 176.68mn barrels of oil equivalent, from 184.1mn barrels in the prior quarter.
Gazprom’s gas sales in Europe (excluding FSU) have fallen 18% y/y, while the overall demand for gas was down only 6.5% y/y, Kommersant reports. Gazprom’s exports to Germany, Italy and Turkey fell 25%, 14.6% and 42% y/y respectively. Gazprom’s market share in non-FSU Europe (excluding the Baltic states, but including Turkey) fell 4.4pp in 1H20 to 27.8%, the company estimates. Norway and Algeria also reduced their sales in Europe, with Algeria’s exports declining 28.9% y/y. US and Qatar LNG sales in Europe increased 129% y/y and 16% y/y, respectively, while their market shares amounted to 6.2% and 6.6%.
Russian state development bank VEB said on August 26 it will provide a RUB55bn ruble ($741mn) loan for Gazprom’s liquefied natural gas project near the Baltic Sea port of Ust-Luga, Reuters reported. The project will comprise building both a gas processing complex with an annual capacity of 45bn cubic metres and a 13mn tonne per year LNG plant at the site. RusKhimAlyans, a joint venture between state gas company Gazprom and its Russian partner RusGazDobycha, plans to use the funds to prepare the project’s documentation, for advance payments and some other costs, VEB said. Royal Dutch Shell quit the project last year after Gazprom moved to integrate its Baltic LNG project and gas processing plants and added a partner with links to an ally of Russian President Vladimir Putin.
The overall spending on the gasification programmes in Russia is estimated at RUB 603bn (USD 8.1bn) over 2021-25, Interfax reports, citing a Gazprom Mezhregiongaz presentation during an online meeting organised by the United Russia party. Of this, Gazprom might invest RUB 526bn (USD 7.1bn): RUB 247bn might be allocated to the construction of offshoot pipelines and gas distributing plants, and RUB 279bn to build intersettlement pipelines. Gazprom is to undertake to increase the degree of gasification in Russia to 83% over the next ten years, from 70% at the beginning of 2020. Andrey Turchak, Secretary of the General Council of United Russia, has suggested that Gazprom be made responsible for all gasification-related construction. The company might be compensated for this through MET tax breaks or via other government support mechanisms.RUB 526bn is equal to 6% of Gazprom’s overall capex and 8% of its nonupstream capex over 2021-25, on our
94 RUSSIA Country Report September 2020 www.intellinews.com