Page 121 - RusRPTDec20

the details will be provided when available.
· 2020F and 2021F capex are guided at some RUB 850bn and RUB
1tn, but the latter is subject to many assumptions (e.g. OPEC+
decisions).
· The company hopes that it will be able to distribute dividends for
1H2021.
Rosneft​’s BoD approved sale of 10% of Vostok Oil to Trafigura. ​No price has reportedly yet been determined, as final negotiations are still ongoing, Kommersant and others.
Attracting a significant amount of foreign investment to the Vostok Oil project as been a Rosneft goal from day one, and this deal is important more for getting the process started – and for signaling that the ambitious project is ‘real’. Therefore, although the event is unsurprising in the big picture – albeit the timing of such things is always a bit uncertain – this is a positive event for ROSN.
Vostok Oil is Rosneft’s major growth project for the 2020s, incorporating existing fields in the Vankor Cluster as well as fields in the nearby Taimyr region. Plateau production is estimated at 2mmbd or more from the estimated resource base of 6bn tons (c44bn bbl) and an LNG project is envisioned to market gas from the region. In September’s oil tax overhaul, Rosneft received additional tax breaks on production from Vankor that are to be directly applied to infrastructure buildout for Vostok Oil (ports, airports, roads, etc.). Total investment will run RUB8.5 trillion (over $100bn) over the life of the project, so the desire to attract capital and expertise for risk-diversification purposes is understandable.
Rosneft’s first stake sale in its Vostok Oil project is positive in the stock more for signaling that the ambitious project is a ‘go’ than for the size of the investment itself, which itself has yet to be fully determined.
● Lukoil
Lukoil​ management hosted a call on the 3Q20 IFRS results on November
25​. The main takeaways from the call are as follows:
· Oil production upside: Management estimates Lukoil has c230kbd of idle capacity, good for 15% output growth once OPEC+ constraints are removed
· Uzbek gas output has almost completely recovered as of November after being almost completely halted in summer due to an offtake halt by China
· Refining margins, both international and domestic, are low and likely to rise
121 ​RUSSIA Country Report​ December 2020 www.intellinews.com