Page 95 - RusRPTOct19

9.2 Major corporate news 9.2.1 Oil & gas corporate news
● Rosneft
Russia's largest oil major Rosneft plans to bring in Saudi Arabia’s petrochemical company Sabic as an investor in Indian downstream assets, Vedomosti reported on September 25 citing unnamed sources. Sabic could invest into Nayara Energy controlled by Rosneft. The respective memorandum on understanding should be signed during the upcoming visit of the President Vladimir Putin to Saudi Arabia. Nayra Energy (former Essar oil) was acquired for $10.9bn by Rosneft in 2017, jointly with UCP of Ilya Sherbakov and Trafigura oil trader. The planned investment in the company $6.7bn, the sources told Vedomosti, which is comparable to 10-15mn tonnes of refining capacity. Previous reports claimed that Rosneft and a consortium of investors are considering an investment of $850mn over two years in upgrading the Indian Vadinar refinery. Rosneft reportedly also intends to expand the presence of Nayara Energy (which controls Vadinar) in the retail sector, which already operates 5,300 petrol stations in India. Rosneft holds 49.13% in Nayara.
● Novatek
At the Eastern Economic Forum in Vladivostok, Novatek signed a MOU with India's H-Energy to supply LNG to India on a long-term basis, to make joint investments in H-Energy LNG terminals and future Novatek LNG projects, and to create a JV to market LNG and natural gas in India, Bangladesh and other regional markets. It also signed a MoU with India's Petronet LNG for supplying LNG to the Indian market, as well as for investment by Petronet LNG in future Novatek LNG projects and for LNG marketing on the Indian market. The company also signed a heads of agreement with Sovcomflot on creating a JV for managing the construction and operations of Arctic ice-class LNG carriers. Kommersant has reported that the JV will manage 17 Arc7 LNG carriers for Novatek's Arctic LNG-2 project, whose construction at the Zvezda shipyard will be financed by loans from VEB (a R300bn loan with a 4.85% interest rate already approved for 15 carriers). The total price for the 17 carriers is estimated in the Kommersant report at $5.5bn.
Russia's second-largest gas producer and global liquefied natural gas (LNG) Novatek will seek to sell LNG from its first Yamal plant through medium-term contracts, the CEO and main shareholder of the company Leonid Mikhelson told the press. Mikhelson explained the need for a new sales channel with the fact that Yamal's productivity was 7%-8% higher than projected in 1H19, with the excess output expected at about 1.5mn tonnes of LNG by the end of 2019. He added that the plant will launch an additional line in 1Q20, which will increase output by an extra 1mn tons, but did not disclose the mechanism to bind contract prices. "Given that surplus output accounts for less than 10% of Yamal’s total, the deviation of medium-term spot-based from long-term oil-linked contract prices will have a negligible impact on the project’s valuation," BCS Global Markets commented on September 27, seeing the news as neutral for Novatek. The company, under the control of Russian businessmen Leonid Mikhelson and Gennady Timchenko, saw net profits climb almost six-fold year on year to RUB451bn ($7bn) in the first half, as
95 RUSSIA Country Report October 2019 ww.intellinews.com