Page 12 - FSUOGM Week 33

FSUOGM PERFORMANCE FSUOGM

Rosneft bounces back

with $0.7bn profit in 2Q20

RUSSIA RUSSIA’S largest oil company, state-controlled BCS Global Markets reiterated the Buy
Rosneft, reported second quarter IFRS finan- recommendation for Rosneft shares with
cials, showing revenues of $14.9bn and Ebitda a target price of $8, and suggested that
of $2.5bn, beating the consensus expectations by investors focus on the company’s potential
2% and 9% respectively. exposure to the Finance Ministry’s latest
Notably, the company accounts for over 50% tax claims, the speed of output ramp-up in
of Russian crude output and posted net profit of August post-OPEC+ constraints, and the
$0.7bn in 2Q20, by a large margin beating the volume of additional Chinese prepayments
expectations of $0.15bn for its bottom line. in the very near future.
Rosneft posted its first quarterly loss since As covered by bne IntelliNews, the Finance
2012 in 1Q20 as the onset of the coronavirus Ministry reportedly is attempting to get oil
(COVID-19) crisis sank oil prices. majors to pay back the $2.3bn of tax reve-
“Despite the relatively wide range of consen- nues lost in the 2019 trial of the experimental
sus estimates and the highly volatile nature of the Excess Profits Tax (EPT) on certain oilfields.
macro environment in the quarter, we consider Rosneft and another state-owned oil major,
this to be a positive event for the stock,” BCS Gazprom Neft, are seen as most exposed to
Global Markets commented on August 14, not- this regulatory risk.
ing the outperformance of Rosneft’s financials. As far as output is concerned, the latest oil
At the same time, the free cash flow (FCF) extraction data showed that Rosneft has already
showed expectedly weak negative $0.1bn, down started to increase its output in the beginning of
from the average $3.6bn in the previous four August. Along with other peers, the state major
quarters. FCF fell despite Rosneft slashing cap- has sharply cut the output from its smaller sub-
ital expenditures from their quarterly average of sidiaries (such as Bashneft), so that the parent
$3.2bn to $2.5bn in 2Q20. companies could produce more.™

Price of Russian gas in Moldova cut

MOLDOVA THE price of the Russian natural gas delivered Moldovagaz explained that the benchmark
in Moldova in the fourth quarter of the year is annual contract price for gas is estimated, not
projected to drop to around $100 per 1,000 cubic the price charged, and the actual price is revised
metres from $133.6 in the third quarter, and the on a quarterly basis. According to Moldovagaz,
initial estimate for the whole year is $173.4, the purchase price for gas at the beginning of the
according to Moldovagaz, the Moldovan gas third quarter was $133.6 per 1000 cubic metres,
transport company controlled by Gazprom. and in the fourth quarter the forecasted price will
Notably, Romania’s natural gas transport be about $100.
operator Transgaz completed the pipeline that The company described what constitutes the
can bring gas to Moldova’s industrial area around final price for gas on the border with Moldova,
Chisinau at the end of July. No details about if it is bought on the St. Petersburg International
deliveries have been revealed yet. Commodity Exchange.
Moldovagaz explained the formation of gas The gas price based on the results of trading
price, in response to information circulated by Mol- on this exchange from August 11, 2020 is $48 per
dovan media about Russia overcharging Moldova. 1000 cubic metres.
Under the contract between Moldovagaz Another $37 per 1,000 cubic metres is the
and Gazprom on the supply of natural gas for fee for using Gazprom’s main gas pipelines
2020, the estimated price is $173.4 per 1000 when providing gas transportation services
cubic metres. At the same time, according to for subsequent delivery to consumers located
the Federal Customs Service of Russia, the aver- outside the territory of the Russian Federation
age export gas price in June was $82 per 1,000 on the territory of a member country of the
cubic metres. This was reported at the beginning Customs Union.
of the week by the Omega portal and several The gas transportation through the territory
other Moldovan media outlets. The publication of Ukraine is $33.9 per 1,000 cubic metres in
stressed that Moldova is clearly overpaying for August. The total price will thus be $118.9 per
gas, although it is the poorest country in Europe. 1,000 cubic metres.™

P12 www. NEWSBASE .com Week 33 19•August•2020