Page 101 - RUSRptSept18

In May Novatek established MAT, its own transportation subsidiary, (Morskoy Arktichesky Transport, or Sea Arctic Transport in English), to manage it’s fleet of tankers and icebreakers delivering LNG from its major projects. In June Novatek was already searching for more tankers to transport LNG , as its production volumes increased, and in August the company reportedly asked ship-owner Teekay to deliver a second Arc7 tanker earlier than previously planned . The new terminal in Murmansk, located on the export route to Europe, should help to reduce transport costs by boosting the efficiency of the transportation process, Aton Equity commented on August 21, while noting that the capital spending for the terminal is yet to be determined. Aton reminds that capex for a similar capacity transshipment terminal in Kamchatka is estimated at RUB108bn ($1.6bn), with 35% to be financed from the federal budget. The analysts believe the Murmansk project should help Novatek to cut LNG transportation costs, as well as to reduce the number of expensive Arc-class LNG tankers needed. "Planned transshipment terminals in Kamchatka and Murmansk might help Yamal LNG save on transportation costs in the Asian direction and optimise shipments to Europe," VTB Capital commented on August 21. The $1.6bn capex number for the Kamchatka terminal is somewhat above $1bn–1.5bn guided by the company previously, VTB notes, also arguing that Novatek is likely to use a similar scheme of state-supported financing for Murmansk terminal. Overall, VTB views the company’s focus on cost optimisation as positive. Novatek launched its first major LNG project Yamal in 2017 despite Western sanctions against its shareholder and influential Kremlin insider and stoligarch Gennady Timchenko . The company has also adopted an ambitious strategy for LNG growth through 2030 and is planning a second LNG plant, Arctic-2. Novatek has already agreed to sell a 10% equity share in the project to France's Total for $2.55bn (giving it a valuation of $25.5bn) and is reportedly in talks to bring South Korea's Kogas on board .
Russian natural gas giant Gazprom suspended its external borrowing plans thanks to the threat of legal action as part of its legal dispute with Ukraine's Naftogaz , Reuters said on August 6 citing unnamed banking sources. Previously a London court froze Gazprom's assets in June as part Naftogaz’s attempt to force Gazprom to pay $2.6bn award granted by an arbitration ruling in Sweden. In Swedish courts, however, Gazprom managed to pause any attempts to enforce the award payment until it goes through the appeal proceedings the Russian company initiated. Reuters’ sources claim that the British verdict has scared off Western banks from working with Gazprom "because it raises the possibility that any new funds the company might raise via London could also be frozen." Reportedly Gazprom had to call off a road-show for a potential GBP Eurobond issue in the middle of June needed to refinance $15.2bn in external debt by the end of 2018, according to another Russian banker. Other sources claim that Gazprom had also had to call off the planned euro and Japanese yen Eurobond planned this autumn. “As I understand it, settlements with foreign banks done via London are affected,” another banker told Reuters, with yet another source claiming that Gazprom had stopped making any payments through banks in Britain. Gazprom was still
101 RUSSIA Country Report September 2018 www.intellinews.com