Page 97 - RusRPTSept20

tonnes of oil, the depth of refining rose 1.4 percentage points to 75.2%, production of light oil products stood at 56.3%.
● Novatek
News: Yesterday, Novatek held a conference call on its 2Q20 financial results.
The key takeaways from it are as follows.
❏ Yamal LNG continues to operate above nameplate capacity, at 109% (despite maintenance at two trains) and has not faced any cargo cancellations. The company has not received requests to renegotiate the long-term contract.
❏ Train 4 of Yamal LNG will be completed in 4Q20.
❏ Regarding Arctic LNG 2, three GBS launches were reconfirmed for 2023, 2024 and 2026. Novatek is not in a hurry to sign long-term contracts for Arctic LNG and expects project financing to be secured in 2021. The company thinks that there is an expectations gap between buyers and sellers of LNG right now, which is to close at some point.
❏ Novatek’s gas production growth in 2020 was reiterated at 2% y/y, with liquids output to remain flat y/y.
❏ The 2020 capex guidance was reduced to RUB170bn (from RUB200bn guided earlier). The reduction is to come from ‘ancillary projects’ and will not affect LNG projects.
❏ The company is committed to increasing its dividend payout, and this question is to be discussed at the August BoD meeting.
❏ In 2Q20, the LNG netback was 2.4x higher than for domestic deliveries of gas in 2Q20, and was the lowest ratio historically.
Russia's second-largest natural gas producer and liquefied natural gas (LNG) leader Novatek has announced the launch of extraction at the wet gas formations in its Russkoye and Tazovskoye fields with a total capacity of 7.7bn cubic metres and 1mn tonnes per year (tpy) of liquids production. While the ramp-up of the production of both fields was well known and anticipated by the analysts, the news might still boost Novatek's stock performance, BCS Global Markets commented on August 4 seeing the news as positive. "The launch of any major production project, even one that should be well-known by analysts, often causes a period of outperformance for the stock," Robert P Smith of BCS GM wrote.
● Lukoil
Russia's second-largest oil producer and largest independent oil producer Lukoil held a conference call upon the publication of 2Q20 IFRS results, in which the management signalled expected recovery of output following the OPEC+ cuts applied in May-June, issues with gas production and exports in Uzbekistan, and it reiterated its capex target for this year. As reported by bne IntelliNews, Lukoil has shown mixed results in 2Q20, that dividend the analysts on short-term risks to its dividend outlook. Notably, Lukoil was forced to reduce gas production at its Gissar field projects in Uzbekistan by 28% in 1Q20 and by 69% in 2Q20 versus the 4Q19 level due to the decline
97 RUSSIA Country Report September 2020 www.intellinews.com