Page 163 - RusRPTMay21

Capex was lower than forecasted, at RUB49bn (we expected RUB59bn) resulting in FCF of RUB16.5bn (before changes in working capital), or below our RUB18bn forecast. All in all, we think the results are largely neutral.
Tatneft signed three agreements in Kazakhstan 5 April, on a bitumen project; a butadiene rubber project; and the beginning of construction on the KamaTyresKZ tire manufacturing JV between Tatneft and Allur Group, Vedomosti reported. Investment in the tire plant will amount to $280mn, with the plant expected to launch in 2022 and full production to be reached in 2025. The plan is for 40% of the tires produced to be exported. The company signed an agreement on the production of butadiene rubber with NC KazMunayGas starting in 2025, with capacity of 186kt of butadiene rubber and 170kt of isobutene. The finalized products will be used for tire production, with tires exported to Europe, Russia, China, Turkey and other countries, according to the press release. Some material will also be supplied to Tengizchevroil. Tatneft also signed an agreement with the government of Kazakhstan on a road bitumen project to produce 300kt of road bitumen per year in Kazakhstan.
Tatneft has signed a Memorandum of Understanding with Zarubezhneft on the joint implementation of projects in Iraq, in the autonomous region of Kurdistan, as well as in countries in the Middle East and North Africa, Vedomosti reports. According to the paper, Tatneft is considering providing oilfield services on the Iraqi market, including well drilling and geodetic surveys, as well as developing oil refining, participating in contracts for the construction, design and purchase of equipment, and supplying tyre products.
Nostrum Oil & Gas has reported its 4Q20 financial results. In 2020, production was 22.3kboe/d (+6% above guidance) and sales were 21.5kboe/d (+8% above guidance). Annual sales volumes were down 15% y/y, with the decline driven by gas sales (-21% y/y) and LPG sales (-17% y/y), while crude and condensate sales were down 4% y/y, as the company halted drilling activities. In 4Q20, sales grew 10% q/q thanks to the 21% q/q growth in gas sales and 12% q/q growth in LPG sales, while liquids production was down 3% q/q (after the slight jump in 3Q20). There were no major surprises in realised prices for us, as they largely matched the crude oil and LPG macro benchmarks. As a result, 4Q20 revenues declined 7% q/q to $40mn. Overall, revenues for 2020 matched the company’s guidance (given in January) of more than $175mn. The cost of sales and non-income taxes was down 10% q/q. G&A expenses were down 3% q/q, while selling and transport expenses were down 6% qoQ. Therefore, EBITDA was down 6% q/q to $20mn (when adjusted for the $245mn impairment, mostly related to working oil and gas assets). The net loss for the quarter was recorded at $240mn ($6mn if adjusted for the impairment). The company’s FCF was $12mn in 4Q20.
163 RUSSIA Country Report May 2021 www.intellinews.com