Page 8 - FSUOGM Week 48 2019

FSUOGM PERFORMANCE FSUOGM
Belarusian losses from Russian tax changes to reach $5.8bn by 2024
BELARUS
THE losses of Belarusian oil refineries from the so-called tax manoeuvre in the Russian oil industry will reach $320mn this year, and with global oil prices at $60 per barrel will reach $5.8bn between 2019 and 2024 according to Belarusian state refining group Belneftekhim’s deputy chairman Andrei Bunakov.
“With the annual amount of processed oil at 18mn tonnes and the global price for oil at $60 per barrel, losses of the two refineries are close to $320nm in 2019 alone. Meanwhile, the oil price [Belarus pays] is already close to 80% of the global price,” government news agency BELTA quoted him as saying on November 28.
Changes in Russian oil taxation, which have lowered export duty while raising mineral extraction tax (MET), have increased costs for
Belarus, which gets its oil from Russia duty free. Export duty will reach zero in 2024.
Belarusian officials have warned that the country faces a new economic crisis if Minsk fails to secure full compensation from Russia for the losses. According to the Belarusian Finance Ministry, the country’s budget revenue losses from the tax manoeuvre in 2019 alone were esti- mated at BYN600mn ($300mn), and that the losses might total $2bn by the end of 2024.
However, in December 2018, Lukashenko’s spokesperson said in a televised interview that Minsk already lost $3.6bn due to Russia’s cut of energy subsidies to Belarus. Due to Moscow’s tax manoeuvre Belarus will lose extra $11bn within the next four years, the spokesperson added.™
Gazprom sees 45% net profit drop in 3Q19 on lower prices
RUSSIA
Gazprom suffered from declining exports and lower prices.
RUSSIAN natural gas giant Gazprom posted a 45% year-on-year decline in net profit under IFRS in 3Q19 to RUB212bn ($3.3bn), attributed to the decline exports deliveries and lower gas prices in Europe.
Gazprom saw total sales decline to RUB1.6 trillion in the reporting quarter versus RUB1.9 trillion for the same quarter of 2019. European and non-CIS sales were down by 37% y/y, with prices of natural gas averaging to $169.8 per 1,000 m3 from $250.8 last year.
Nevertheless, Gazprom was supported by 5% q/q higher top line of its oil subsidiary Gazprom Neft thanks to strong downstream (refining) performance. Another boost came from $1.1bn revaluation gain associated with the recent treas- ury stock sales, which brought Gazprom’s net profit in line with expectations.
As reported by bne IntelliNews, in July and November Gazprom held two SPOs of qua- si-treasury stakes to undisclosed buyers, cashing in on the recent rally of its shares and record- high capitalisation.
In June Gazprom’s shares soared after the management revised up the company’s dividend
strategy, bolstered by rumours of a reshuffle of incumbent Kremlin managers that did not materialise. The capitalisation of Gazprom as of November 21 exceeded RUB6 trillion.
Still, in 9M19,Gazprom’s profit amounted to about $10.5bn, which implies a risk of DPS (dividend per share) going lower y/y even with 35% payout, BCS Global Markets warned on November 29.
Gazprom’s free cash flow (FCF) remained negative not only amid seasonally lower gas sales, but also due to with inventories build up in European underground gas storages ahead of talks with Naftogaz translated. FCS stood at about $1.1bn negative, which was less than in 2Q19 (-$0.9bn adjusted for working capital).
Ebitda matched the pessimistic BCS/consen- sus forecast and was 26% down q/q in 3Q19 to $5.71bn driven by extremely low export gas price and seasonally low gas sales in Russia along with negative impact of FX on operating costs, BCS GM wrote.
Gazprom’s net debt went up 11% q/q on the back of negative FCF and FY18 dividends pay- ment partly offset by the SPOs. ™
P8
w w w . N E W S B A S E . c o m
Week 48 04•December•2019