Page 14 - FSUOGMWeek142020

FSUOGM POLICY FSUOGM
Russia ups gas targets for 2035
RUSSIA
The goal is to be reached with the help of higher LNG output.
RUSSIA has raised its forecasts for national gas production in 2035, under a long-term strategy approved by the government last week.
Russia now expects to produce between 860bn cubic metres and 1tn cubic metres of gas by 2035, according to a copy of the strategy published by the energy ministry on April 1. It previously predicted an output of 850-924 bcm. The country lifted around 738 bcm of gas in 2019, up 1.7% year on year. Its target for 2024 is unchanged at 795-820 bcm.
LNG production is set to be a driving force behind this growth, rising from 29.5mn tonnes (40 bcm) in 2019 to 80-140mn tonnes (109-190 bcm) in 2035. The previous goal was 70-82mn tonnes. Much of this extra supply will come from the Yamal and Gydan peninsulas in the Russian Arctic, where Novatek plans to build several new export terminals.
Gazprom also has a number of new gas pro- jects on Yamal in the pipeline. The next two fields scheduled to start up are Kharasaveyskoye,
which will come on stream in 2023 and flow 32 bcm per year, and Kamennomysskoye-more, anticipated to flow 14.5 bcm per year starting before 2025.
While European gas demand is anticipated to remain flat over the coming decades, Russia may be able to expand its market share as a result of declining indigenous production. Gazprom is also targeting increased sales to the Chinese market.
The company aims to break ground this sum- mer on the Power of Siberia gas pipeline’s section in the Irkutsk region, the Irkutsk government announced on April 3.
Gazprom started flowing gas via the 38 bcm per year Power of Siberia to China in Decem- ber. The pipeline currently carries gas from the Chayandinskoye in Yakutia, due to ramp up its output to 25 bcm per year by the early 2020s. Extending the pipeline into the Irkutsk region will enable it to flow gas from the Kovyktinskoye field as well. ™
PROJECTS & COMPANIES
Sibur prepares COVID-19 response measures
RUSSIA
Sibur plans to
cut spending and potentially shut down some facilities
RUSSIAN petrochemicals giant Sibur has pre- pared a package of “anti-crisis” measures in response to the coronavirus (COVID-19) pan- demic, including cuts to spending.
The company is planning to scale back its investment programme, valued at RUB126bn ($1.65bn) in 2020, while also targeting a reduc- tion in operating expenditure, according to documents seen by Russia’s Vedomosti business daily. In addition, it is taking steps to ensure the safety of personnel and to maintain stable production.
As part of the plan, all employees at the com- pany’s head office in Moscow, as well as admin personnel at other locations, have switched to a four-day working week. The company may decide to shut down some production sites temporarily if they begin operating at a loss as a result of the economic impact of the pandemic.
“We are trying to ensure the flexibility of our business for the future; therefore we respond not only promptly, but even ahead of schedule, in order to avoid drastic measures in the future,” a company representative told Vedomosti.
Sibur is also looking to cut the costs paid to third-party service providers, and has revised the timeframe for its investment projects. Its goal is to reduce potential losses incurred as a resuilt of the pandemic by around a third through
taking these steps.
Sibur’s revenues were down 6.6% last year
at RUB531.3bn and EBITDA dropped 15.4% to RUB170bn. However, its net profits surged by 27.6% to RUB141.4bn, thanks to lower cap- ital expenditure. The company has completed construction of its new ZapSibNeftekhim pet- rochemicals complex in Western Siberia and is now commissioning its units. This has freed up cash flow.
Sibur has not provided guidance for its 2020 results. Gazprombank analyst Evgenia Dyshlyuk predicts that its EBITDA may slide by 20-25% in dollar terms this year at current low oil prices. But this forecast does not take into account the loss of revenues as result of the likely drop in sales.
Sibur is less exposed to the oil price collapse than Russian downstream operators thanks to its diversified revenue mix. Petrochemical prod- uct prices are also more stable at present than prices for other petroleum products, according to Dyshlyuk.
Sibur’s priority is now bringing the ZapSib- NefteKhim complex up to full capacity and ship- ping the bulk of its production to Asian markets, where demand is rising and prices are higher, according to Vedomosti. The complex is capable of producing 1.5mn tonnes of polyethylene and 500,000 tonnes of polypropylene annually.™
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