Page 8 - EurOil Week 43 2021

EurOil COMMENTARY EurOil

Gazprom to build up

$10.2bn risk fund

The Russian gas supplier projects a steep rise in revenues this year, but wants

to be prepared for risks

RUSSIA RUSSIA’S Gazprom announced on October 19 estimate from RUB45.6 to RUB39 per share,
it would be a reserve fund worth RUB726bn implying yields of 11% and 12% respectively.
WHAT: ($10.2bn) by the end of the year to manage
Gazprom wants to set up potential risks, even while it generates record Sanctions talk
a $10.2bn risk fund. gas revenues on the back of a surge in prices over Gazprom could come under additional
recent months. sanctions pressure after fresh US calls to imple-
WHY: The deputy chairman of Gazprom’s man- ment sanctions on the Nord Stream 2 project,
The Russian company agement committee, Famil Sadygov, said the although analysts doubt that this will cause any
wants to be prepared fund would provide “necessary budget strength serious problems.
for risks, including from and resistance to volatility in the external During a hearing on the US Treasury Depart-
possible US sanctions. environment.” ment’s sanctions policy on October 19, Republi-
Gazprom has approved its 2021 investment can Senator Pat Toomey put pressure on Deputy
WHAT NEXT: programme at the previously announced level of Treasury Secretary Wally Adeyemo on why the
Sanctions are unlikely to RUB1.19 trillion, Sadygov said, which includes Biden administration had not implemented
pose an obstacle to Nord RUB1.02 trillion of capital expenditure. This fig- sanctions imposed on the Nord Stream 2 pipe-
Stream 2 at this stage. ure is based on an average gas price of $269.6 per line under the Countering America’s Adversaries
1,000 cubic metres, he said. Through Sanctions Act into law. Biden himself
Gazprom typically uses a conservative gas has indicated that continued US pressure on
price to calculate its investment in a given year. Nord Stream 2 is pointless, as Germany remains
Wholesale gas prices have spiked in recent a staunch supporter of the pipeline and Washing-
months, reaching almost $2,000 per 1,000 cubic ton needs to prioritise its relationship with Berlin.
metres at the Dutch TTF hub on October 6. The “We’re committed to working with you and
price growth will have affected some of Gaz- this committee to hold Gazprom responsible for
prom’s long-term contracts, which factor in hub its activities that violate our sanctions,” Adeyemo
prices. said, but did not disclose details on how the
“Compared with the initial plan, the proceeds Treasury Department would do this.
from gas sales have increased by almost 30%, “At this time, we do not expect additional
which will allow Gazprom to reach an historic sanctions pressure on Gazprom, although Nord
record level of revenues in 2021,” Sadygov said. Stream 2 AG could eventually be added to the
This comes after Gazprom recently SDN list, as this is technically required by law
announced it had boosted gas flow to countries even though the entity was given an exception
outside the former Soviet Union by 13.1% in the earlier this year,” Sova said. “There have been
year up to mid-October, to almost 152bn cubic bipartisan calls to follow through with sanc-
metres. tions on Nord Stream 2 AG, and such legislation
Gazprom also expects its EBITDA to almost could be included in this year’s National Defense
double to over $45bn this year, although ana- Authorization Act (NDAA). We believe Gaz-
lysts at Moscow-based Sova Capital said this prom and Nord Stream 2 AG, along with Ger-
figure was slightly below their forecast. Based on many, are prepared for such actions from the
that, they have lowered their dividend per share US.” ™

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