Page 95 - RusRPTSept20

numbers. Gazprom spent RUB 153bn on gasification in 2015-19, or 2% of its capex for these years. Therefore, the estimated gasification spending might grow in the coming years if the gasification programme intensifies.
Russian energy giant Gazprom said that its board of directors has approved a decision to divest its 50% direct and indirect interest in Bulgarian natural gas supplier Overgas for €15.5mn ($18.3mn), SeeNews reported. Gazprom will divest 0.49% interest in Overgas for €151,900 euro, while its unit Gazprom Export will divest a 49.51% stake for €15,348,100 euro, Gazprom said in a filing to the Moscow Stock Exchange on Wednesday. The company did not provide further details regarding its decision.
New contractors of Russia's Gazprom supported by Rotenbergs. The new large drilling and servicing contractor of Russia's gas giant Gazprom, RusGasBurenye (RGB), is supported by credit guarantees of Gazprom Burenye, RBC business portal reports on August 3 citing the audits of the Federal Tax Service. Gazprom Burenye is controlled Arcady Rotenberg and his son Igor Rotenberg, stoligarchs in the Kremlin's inner cicle, and is one of the largest recipients of state contracts. As reported by bne IntelliNews, Gazprom has been consolidating its contractors and reportedly eyed buying Gazprom Burenye. Most recent reports suggest that Gazprom has acquired another of its main contractors, Stroytransneftegaz (STNG), from billionaire businessman Gennady Timchenko for $700mn.
The export revenue of Gazprom Export, the trading arm of the Russian gas giant, was halved year-on-year over the first six months of this year in a result that surprised no one.
Gazprom’s export revenue fell 51% y/y to only $11.3bn in 6M20, with June prices at $82/mcm reports Kommersant, based on recently reported data from Russia’s Federal Customs Service.
There is a gas glut in Europe following the showdown between Russia and Ukraine over the renewal of the gas transit deal at the end of last year. Both countries built up considerable gas reserves. The situation has been made worse by an abnormally warm winter and more recently the fall in demand thanks to the coronacrisis. That drove the prices of gas below $100 per thousand cubic meter earlier this year and its still falling.
“June data affirms gas markets remain out of sync with oil markets. The reported $82/mcm average selling price is below Gazprom’s accounting breakeven level of c$100/mcm (per Kommersant), although above its cash breakeven of c$75/mcm (our estimate). By our forecast, Gazprom will likely report $5bn of European export revenues in each of the 2nd and 3rd quarters of 2020 including trading revenues, the lowest in over 15 years,” BCS Global Markets said in a note.
Hub prices in July and August have improved, but are still very low at c$94/mcm at the Netherlands TTF hub, for example, reports BCS GM.
Meanwhile, wellhead margins for Russia’s oil producers have been at or above normal since May, highlighting that gas markets remain out of sync with oil markets, at least from the point of view of Russian producers.
“We reiterate our near-term L/S pair trade of long Lukoil, short Gazprom. That being said, Gazprom remains a Buy on a long-term view, as we think the gas
95 RUSSIA Country Report September 2020 www.intellinews.com