Page 131 - RusRPTJul21

Gazprom Neft intends to raise annual production by 50% over the next five or six years to around 150mn toe.
The company's key priority is the development of Jurassic-Neocomian gas and gas condensate reserves at the Bovanenkovo, Kharasavei and Urengoi fields. Once these deposits have been launched, gas should account for 45% of the company's output, up from the current 37-38%.
Given the rising share of gas and gas condensate in Gazprom Neft's output, the company might consider constructing petrochemical projects, potentially with partners.
Yakovlev stressed that the company's main exploration potential lies in the Yenisei project and hard-to-recover (Achimov and Bazhen) projects. The company currently allocates about 5% of its capex budget for these long-term options.
New partnership agreements for the company's projects (JVs) could be signed at the St Petersburg International Economic Forum.
Our view: The interview provided the first specific medium-term production target for Gazprom Neft. The figure is in fact bang in line with our estimate. We recently highlighted Gazprom Neft's unique combination of superb quality long-term growth potential (we estimate a 5% hydrocarbon production CAGR over the next decade) and competitive yields. We expect the company's production updates and project execution to be important drivers for the stock.
● Rosneft
Rosneft has sold 5% of Vostok Oil to a consortium anchored by Vitol. The price was not disclosed per the company press release, but Vedomosti reports the deal will be done at the same valuation as the 10% stake sold to trader Trafigura for EUR7bn last December, implying at least a EUR3.5bn price tag.
Vitol a potentially value-additive partner. Vitol trades about 7mmbpd of crude and products, so it is a very serious addition to the consortium. We think adding another trader to Vostok Oil is positive for Rosneft shareholders, as it should help maximize two key advantages of the project in the context of the global oil market.
First, the crude at Vostok Oil is reported to be very sweet – c10x lower sulfur than Brent – meaning it should fetch a significant premium of $10/bbl or more on global markets if properly placed.
131 RUSSIA Country Report July 2021 www.intellinews.com