Page 109 - RusRPTJan22

The company is focused on hydrocarbon production of 330mnt/a by 2030. The key drivers of production growth relative to the current level will be the Vostok Oil project and the other new projects already launched (Russkoye, YurubchenoTokhomskoye, Severo-Danilovskoye and Severo-Komsomolskoye fields), as well as gas projects (Rospan, Kharampur and others).
The share of gas in total hydrocarbon production is to grow to 25% by 2025.
In refining, the company aims to increase light product yields in Russia to 69%.
Double the company’s FCF by 2030.
We treat the news as neutral for the stock right now, although we think investors will generally appreciate that Rosneft’s new strategy includes certain emissions reductions targets and the company is now committed to becoming net zero by 2050. We also believe that an increase in the share of gas in total production will be positively perceived by market players, especially if the company gets access to gas exports . In our view, the share of natural gas production in 2025 might reach 23% in 2025F (2pp lower than the company stated, likely due to the more intensive development of Rospan and Kharampur) from some 18% in 2021.
Rosneft and Indian Oil have signed a contract for the supply of up to 2mnt of oil from Russia by the end of 2022 through the Novorossiysk sea port. The signing took place during Russian President Vladimir Putin’s visit to India.
● Novatek
NOVATEK and Uniper SE have signed a non-binding agreement for the longterm supply of up to 1.2mnt/a of low-carbon ammonia, mainly to the German market, Interfax reports. Ammonia is to be supplied by the projected Obsky Gas Chemical Complex, which is going to use сarbon capture and storage (CCS) technologies. The price of the products will be determined on the basis of the corresponding European and world quotes.
● Other
Tatneft and KMG to invest $1bn in petrochem plant. Tatneft finalizes its Butadien JV with KazMunaiGaz. Interfax reported. The deal, initially announced this past spring, is a 75/25 TATN/KMG project to produce up to 180k tons of butadiene and butadiene rubbers annually. Analysis: A modest
109 RUSSIA Country Report January 2022 www.intellinews.com