Page 13 - FSU OGM Week 26 2021

FSUOGM PROJECTS & COMPANIES FSUOGM

Gazprom starts on CBM-to-

LNG plant in Siberia

RUSSIA RUSSIA’S Gazprom has started building a small- is comparatively cleaner, although the plant is
scale LNG plant in the country’s coal heartland nowhere near large enough to make a signifi-
Gazprom will extract of Kemerovo that will use coal-bed methane cant impact on emissions. Kemerovo lacks a gas
the CBM from a field in (CBM) as its feedstock, Vedomosti reported on network, and so supply cannot be secured from
the Kemerovo region. June 24. The facility will provide fuel for local elsewhere in Russia.
mining equipment, trucks and other energy CBM was first produced in the US in the late
consumers. 1980s and today it accounts for 10% of that coun-
Gazprom will extract the CBM from the try’s gas supply. It is also developed in Australia,
Naryksko-Ostashkinskoye. The plant itself is due Canada and China. But in Russia it has generally
online in the first quarter of 2023 and is sched- not been exploited, given the country’s ample
uled to reach its full capacity of 220,000 tonnes supply of cheaper natural gas.
per year (tpy) by the following year. Exploration However, Russia’s Natural Resources Minis-
at the CBM field began in 2011 and so far 33 well try estimates that CBM production in Kemer-
have been drilled. A system for extracting the gas ovo and the wider Kuzbass coal basin could
was established in February this year, and Gaz- be raised to 4bn cubic metres per year in the
prom plans to drill as many as 110 more wells in medium term and as much as 21 bcm per year
the future. in the long term. This would provide enough
Because of its abundance of coal, the Kemer- gas not only to meet the needs of the Kemer-
ovo relies heavily on that fuel for heating and ovo region but other neighbouring provinces
power, resulting in high levels of pollution. LNG as well. ™

NEWS IN BRIEF

RUSSIA in Swiss francs. The global co-ordinators InterRAO could see higher
of the placement are Gazprombank and JP
Gazprom said sanctions Morgan. The coupon benchmark and the costs for Vostok Oil project
date of the bond placement have not yet
affected less than 1% of the been announced. Russian state-controlled utility major
InterRAO estimates that cost of
group's production electricity infrastructure for the Vostok
Oil megaproject of Rosneft oil major at
US and EU sanctions imposed on Russia Transneft to split shares for RUB500bn-RUB600bn ($7bn-$8.3bn),
have affected less than 1% of national retail investors according to Interfax.
gas company Gazprom’s production, the As followed by bne IntelliNews, since the
company said in marketing materials Russia's state oil pipeline operator Transneft involvement of InterRAO in Vostok Oil has
distributed to potential investors for a could split its share, Interfax reported citing been approved, the analysts have questioned
current Eurobond offering. the company's meeting with investors. whether the utility holding's massive cash
In 2014, the United States and the Currently a single share trades at around pile will be used to finance the project.
European Union imposed sectorial RUB173,000 per share ($2,400/share), and Vostok Oil could also add uncertainty to
sanctions on the Russian oil and gas a 100-to-1 split would make it much easier InterRAO dividends.
industry, banning their companies from for an individual investor to trade the stock, The news suggests that the project is
producing oil in the Arctic, deep-sea shelf BCS Global Markets commented. turning out to be larger than expected and
and hard-to-recover fields, supplying This would increase Transneft's above the management’s previous estimate
equipment for exploration and production attractiveness for retail investors, BCS of RUB200bn-RUB300bn, VTB Capital
in these areas, as well as supplying services GM notes, seeing the news as positive (VTBC) commented on June 25.
in these areas. and possibly fuelling the recent rise in At the same time, these estimates were
Gazprom itself did not come under Transneft's share price. given with a capacity of 2.5 GW, while the
sanctions, nor have any restrictions been As reported by bne IntelliNews, company has recently stated that it now
placed on its ability to attract debt financing Transneft reported EBITDA growth of 17% expects capacity of 3.5 GW needed to power
from abroad. year on year to RUB253bn and net income the project.
In 2020, Gazprom produced 453.5bn of RUB50bn ($0.7bn) in 1Q21 under IFRS, "Until details about the ownership
cubic metres of gas. In 2021, it plans to with the bottom line beating consensus structure and the rate of return have been
increase this figure by 11.7%, to 506.5 bcm. expectations by 19%. The company also made public, we think that the commitment
Its oil-producing subsidiary Gazprom confirmed the dividends after being seen to launch a large project might pose a
Neft in 2020 kept the production of by the analysts as turning into a strong risk to the adequacy of capital allocation,"
hydrocarbons at the level of 96mn tonnes of dividend investment play. VTBC warns.
oil equivalent (toe). While the analysts maintained a Buy
Gazprom has placed a 6-year Eurobond rating on InterRAO shares, VTBC sees the

Week 26 30•June•2021 www. NEWSBASE .com P13