Page 110 - RusRPTJan22

positive. Tatneft has extensive experience in tire manufacturing and related petchem issues and we thus consider this endeavor to be within the company’s competency. Assuming 50% project financing, the $375mn share of equity investment net to TATN would be material vs typical $1.5bn/yr of total CapEx. Construction should wrap up in 2024 with production to launch in 2025. Tatneft announced the signing of a petrochem JV with KMG will require c$1bn of investment to produce over 180k tons of butadiene and butadiene rubbers annually – a modest positive.
Transneft still plans to do a stock split, and some progress has been made in this area. The BoD should discuss this in the near future, with an update coming afterwards.
Capex. Transneft revised its capex down from RUB 232bn to RUB 196bn, which we incorrectly stated in our results review since we looked at just the upgraded revamp capex, the guidance for which the company lowered from RUB 164bn to RUB 137bn. This still implies a pickup in capex in 4Q21 to about RUB 68bn vs. RUB 46bn in 3Q21. Capex is guided for at RUB 210bn for 2022. In the long term, capex should be in the range of RUB 200-250bn.
Labor costs are up. A more competitive labor market was behind the YoY increase in salaries and social expenses, and it should be part of the reason for the expected increase in capex in 4Q21, as there is a shortage of construction workers.
Load outlook. Load could be around 448-450mnt in 2021 and 455-458mnt in 2022 based on bookings thus far. For oil products, we forecast 38mnt for 2021 and 2022.
Treasury shares. Transneft has a joint fund with Gazprombank, and a portion of the company’s treasury shares are there, while some have been transferred into a fund managed by Transneft. All these shares will eventually be considered quasi-treasury and transferred to the Transneft-managed fund.
Vostok Oil. Transneft could ask the regulator for a tariff review if the loss of volumes due to Vostok Oil looks significant, but it is too early to consider this.
Caspian Pipeline Consortium. CPC plans to pay $1.5bn next year, with 7% going to Transneft.
110 RUSSIA Country Report January 2022 www.intellinews.com