Page 109 - RusRPTJul20

Gazprom​ is making plans to increase expansion in the Chinese market​. Thus, since the end of 2019, the monopoly, which has been supplying gas to China via the Power of Siberia gas pipeline, is in talks to increase supplies by 6bn cubic meters, up to 44bn cubic meters of gas per year, the head of Gazprom Alexei Miller said. The company also intends to organize gas supplies from the Far East, build the “Power of Siberia-2” and the “western route” through Altai, bringing the volume to 130bn cubic meters per year. Gazprom is discussing with China the possibility of increasing gas supplies through the Power of Siberia by 6bn cubic meters per year, up to 44bn cubic meters per year, the head of the monopoly, Alexey Miller, said at the annual general meeting of shareholders held on June 26. He noted that China’s demand for gas will grow rapidly.
● Rosneft
Russia's largest oil company state-controlled major​ ​Rosneft​ is asking the government to auctions three new Arctic gas fields, ​eyeing gas extraction assets for its Vostok Oil megaproject, RBC business portal reported on June 3 citingunnamedsources.Asreportedby​bneIntelliNews,​ inOctoberlastyear the Russian government agreed to provide Vostok Oil with a RUB600bn ($9bn) break on the mineral extraction tax (MET), but the project could see investments cut as Rosneft scales back its capital expenditure programme​. Vostok Oil also comprises the Paiyakhsky fields operated by private firm Neftegazholding, controlled by former Rosneft president Eduard Khudainatov, and the assets of Rosneft-BP joint venture Yermak-Neftegaz. Now Rosneft reportedly wants to add natural gas extraction to the upstream mix of Vostok, RBC claims citing the letter of influential head of the company Igor Sechin to Mikhail Mishustin. Reportedly, the company seeks to boost gas resources of the project from current 0.5trillion cubic meter to 2tncm, counting on three extra fields in the Krasnoyarsk region - Ushakovskoye, Deryabinskoye, and Kazantsevskoye. The problem is transportation, as the fields are located far from Russian gas pipeline system, but Rosneft reportedly proposes to transport gas in tankers on the Arctic Northern Sea Route (Rosneft's holding company Rosneftegaz also controls icebreaker-building shipyard Zvezda).
● Lukoil
Russian independent oil major and country's second-largest crude producer Lukoil reported 16% quarter on quarter decline in IFRS revenues in 1Q20, ​along 8% q/q dive in Ebitda to $2.3bn, and net loss of $692mn versus $1.9bn profit in the previous 4Q19. The revenues remained resilient despite 18% decline in oil prices and 8% decline in oil product sales, but Ebitda took a hit from the negative effect of export duty lag and revaluation of inventories, along with the drop in oil price, BSC Global Markets commented on June 4. The bottom line was affected by the same factors as Ebitda, as well as the $0.2bn foreing currency loss on lease agreements and $0.7bn assets impairment charge. At the same time earnigns' decline was on par with that of peers Rosneft (-41% q/q) and Gazprom Neft (-49% q/q). At the same time Lukoil maintained a positive free cash flow of $380mn, albeit 70% q/q lower, partly offset by a seasonal 7% q/q drop in capital expenditures to about $2bn. Net cash turned into net debt of $1.8bn, as 1H19 $2bn dividends were paid in January, just partly offset by positive FCF during the period. "Weak Profit and Loss met our conservative expectations after the 18% q/q drop in Brent price, export duty lag, revaluation and FX loss," BCS GM notes, expecting the
109​ RUSSIA Country Report​ July 2020 ​ ​www.intellinews.com