Page 13 - FSUOGM Week 05 2020

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FSUOGM
As a part of the deal, Na ogaz will pay about UAH15bn for the natural gas owned by Ukrna a (2.06 bcm) and prepay UAH14.6bn for natural gas that Ukrna a will produce in the future.
Na ogaz will receive such money from the government (which must compensate for its PSO-related losses), and will pay it to Ukrna a, and the latter will use the funds exclusively to repay its tax obligations. Vitrenko expects that Na ogaz will receive from the state budget the necessary funds to make such a deal.
e deal was approved by the Ukrna a shareholder meeting of March 28, but the previous cabinet (led by ex-PM Volodymyr Groysman) failed to approve it. e new cabinet “has removed the limitations”, Vitrenko added.
Alexander Paraschiy at Kyiv-based brokerage Concorde Capital believes that “the deal will be completed soon, which will allow Ukrna a to clean up its tax debt and recover its value for shareholders”.
“From a pragmatic point of view, the deal looks bene cial for all the sides. But from a political standpoint the deal looks questionable, as taxpayers are le footing the bill for Ukrna a’s tax debt, which
was generated by the odious oligarch Kolomoisky, who was also behind the PrivatBank debacle,” he added in a note on February 3.
bne IntelliNews, February 3 2020
CENTRAL ASIA & SOUTH CAUSASUS
Kazakhstan’s Tengiz oilfield to lower output in 2020
Kazakhstan’s Energy Ministry said on January 28 that the Central Asian nation’s biggest oil eld, Tengiz, is scheduled to decrease its output to 28.5mn tonnes in 2020, down from 29.8mn tonnes produced in 2019, Reuters reported, citing the ministry’s written replies to questions.
Kazakh authorities have previously said they aimed to keep production at an approximate level of 90mn tonnes for the next 2-3 years. As such, lower production at one of the giant oil elds implies higher output at other oil elds. Total output stood mostly unchanged in 2020 (90.5mn tonnes), compared to 2019.
e second largest oil producer, the Kashagan oil eld, is expected to raise output to 15.5mn tonnes from last year’s 14.1mn tonnes, whereas production at the Karachaganak oil eld is expected to increase to 11.7mn tonnes, up from 11.3mn tonnes,
Maintenance works are planned at all three elds this year, but the works will be carried out without halting output, the ministry said.
bne IntelliNews, January 29 2020
Fitch affirms Socar’s rating at ‘BB+’
Fitch Ratings said on January 28 it
has a rmed State Oil Company of the Azerbaijan Republic’s (Socar) Long-Term Issuer Default Rating (IDR) and senior unsecured rating at ‘BB+’. e Outlook is Stable. e national oil company’s rating is aligned with Azerbaijan’s rating (BB+/ Stable).
Socar is fully owned by the state. Its Standalone Credit Pro le (SCP) corresponds
to ‘b+’, with high leverage the main rating constraint. e company’s IDR is aligned with that of Azerbaijan in view of their strong ties based on Fitch’s Government-Related Entities (GRE) Rating Criteria. e alignment is underpinned by state support provided to the company in the form of nancial guarantees, cash contributions and equity injections, as well as SOCAR’s social functions and its importance as a state vehicle for the development of oil and gas projects.
Fitch noted: “Taxes paid by SOCAR accounted for almost 10% of government revenue in 2018, while income from marketing of the state’s share in pro t oil, to be transferred to the State Oil Fund of the Republic of Azerbaijan (SOFAZ), the national oil fund, accounted for almost 80% of government revenue (compared with 65% in 2017). e growth results from stronger international oil prices in 2018.”
It added: “High Leverage: We expect SOCAR’s leverage to remain high over the rating horizon. In 2018, its FFO adjusted net leverage reduced to 3.3x from 5.0x in 2016-
17 due to higher oil prices and a signi cant positive working capital in ow. We assume
that leverage is likely to revert to its higher level given SOCAR’s continued high capital intensity and Fitch’s assumed oil prices. We project SOCAR’s FFO adjusted net leverage to uctuate between 4.0x and 4.5x in 2020-2022. is level is more typical for companies rated in the ‘B’ rating category or below.”
In a note on the Southern Gas Corridor (SGC) stretching to Italy from Azerbaijan, Fitch said: “SGC Mostly Completed: e USD40 billion SGC project, which is being developed in cooperation with BP plc (A/Stable) and other partners, includes the full- eld development of the Shah Deniz 2 gas eld (SD2), the expansion of the South Caucasus Pipeline (SCPX), and the construction of Trans-Anatolian and Trans Adriatic gas pipelines (TANAP and TAP) connecting Azerbaijan with Turkey, Italy and
some other countries. e project has largely been completed as SD2, SCPX and TANAP became operational in 2018 and TAP should come on stream by end-2020.”
bne IntelliNews, January 29 2020
Tajikistan announces
update on construction
of Central Asia-China gas
pipeline’s Line-D
Tajik Deputy Energy Minister Sharif Hudobakhsh has spoken about progress with the construction of the Tajik section
of Line-D of the Central Asia-China gas pipeline set to run from the gas elds of eastern Turkmenistan to western China, Ozodi reported. e minister said that
the rst tunnel for the Tajik stretch of the pipeline was 99.8% complete and it was expected that it would be nished “on time”.
e Tajik section was originally meant to be completed by end-2020. However, Tajikistan only resumed work on the pipeline in 2018 and construction appears to be only taking place in Tajikistan’s western Rudaki region, bordering Uzbekistan.
Another 47 tunnels need to be built along a 400-kilometre route, the report said. e route then goes into the mountains to remote and sparsely inhabited areas of eastern Tajikistan.
e state company Tajiktransgaz has teamed up with China’s Trans-Asia Gas Pipeline, a subsidiary of the China National Petroleum Corporation (CNPC), to construct and operate the pipeline.
Tajikistan will not receive any of the pipeline’s gas, but expects to see $15bn in transit revenues over a 32-year period.
bne IntelliNews, February 3 2020
Kazakhstan ups fuel output in 2019
Kazakhstan’s three oil re neries produced 4.5mn tonnes of gasoline and jet kerosene in 2019, up 14.4% year on year, according to data published by KazMunayGas (KMG).
astern Tajikistan.
e country can now produce 24% more gasoline than it needs, the national oil company states, with a supply de cit not expected until 2032 at the earliest.
February 4 2020
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