Page 14 - FSUOGM Week 36

FSUOGM INVESTMENT FSUOGM

Azerbaijan's SOCAR offered

Israeli oil refinery

AZERBAIJAN AZERBAIJAN’S national oil company SOCAR demand in Israel to slump.
has been invited to acquire the Ashdod oil refin- Paz’s adjusted net income for the three
But the national oil ery in Israel but has rejected it, press reports in months ending June 30 was ILS8mn ($2.4mn),
company has said it is both countries claim. versus ILS24mn a year earlier. Revenues dropped
not interested. Israel’s Calcalist newspaper reported last 61% to ILS1.36bn, as jet fuel sales plummeted
week that Azeri representatives had visited sev- 80% owing to a steep drop in flights in Israel.
eral Israeli companies, as SOCAR needs a local The company suffered an adjusted operating
partner to help buy the plant, currently owned loss in its refining business for the three months
by the country’s top fuel supplier Paz Oil. Those of ILS66mn, compared with ILS55mn a year
companies included Shafir Andasa and Aspen. before.
However, the company told Azeri media “The refining segment, which was affected
on August 31 that it had received a proposal to by the global coronavirus, record the largest
buy the plant, but it "doesn't consider such an decrease mainly due to a decrease in the number
investment." of barrels sold due to a decrease in demand for
The Ashdod refinery is Israel’s second-largest, fuels and a reduction in production volume,” Paz
with a processing capacity of 95,000 barrels per said in late August, reporting its results.
day (bpd). It is responsible for around 40% of the However, Paz said consumption of fuel for
country’s fuel consumption. transportation had recovered and reached 96%
Paz has been struggling since last year, ini- of its usual level in June. It has been taking steps
tially because of the temporary closure of the to cut costs and boost revenues, and is working
Ashdod refinery so that a cat cooler could be to buy Israel’s Super Yuda retail chain.
installed. Matters became worse when the coro- SOCAR has refining capacity in Azerbaijan and
navirus (COVID-19) pandemic hit, causing fuel owns additional plants in Turkey and Russia. ™

Tatneft reiterates dividends,

long-term strategy

RUSSIA RUSSIAN regional oil major Tatneft of the Tatar- RUB19.30, implying the dividend yields (DYs)
stan Republic has reiterated its dividend policy, of 3.5% for both ordinary and preferred shares.
Tatneft was the first as well as confirmed its long-term strategy, BCS But VTBC estimates that Tatneft might pay as
Russian oil major to Global Markets wrote on September 3 citing the much as RUB29.40 per share and RUB 32.60 per
cancel Q419 dividends conference call of the company's management. share for 2020 under payout ratios of 100% RAS
because of the As reported by bne IntelliNews, Tatneft was net income and 100% FCF, suggesting DYs for
pandemic. the first Russian oil major to cancel the dividends ords and prefs of 5.4-5.5% and 6.0-6.2% respec-
for Q419 due to the coronavirus (COVID-19) tively. Overall, VTBC sees the news as slightly
crisis, prompting fears of across-the-board positive for sentiment on the name.
lower payouts in the Russian oil and gas equity Tatneft also maintains its 2030 strategy in
universe. But the company has since confirmed place, although it could be adjusted for the con-
the dividends. straints of OPEC+ output cuts. In September
The management has again reiterated the 2018 the company approved a 2030 strategy,
existing dividend policy of the larger of 100% of which includes the construction of a RUB70.6bn
free cash flow (FCF) or 50% of IFRS net income. ($1bn) gas chemical complex by 2024, boosting
"Neither of these points is news, per se, but it is oil output to 38.4mn tonnes by 2030.
positive that this was a talking point," in BCS The total investment under that plan was
GM view. RUB1.2 trillion (about $17bn), including
VTB Capital (VTBC) estimated on Septem- RUB799bn ($11bn) on exploration activities.
ber 3 (under the base case conservative scenario BCS GM believes that any material growth in
of Tatneft paying out 50% of IFRS net income in Tatneft's oil production is not factored into the
dividends) the 2020 dividend per share (DPS) at stock’s current market price. ™

P14 www. NEWSBASE .com Week 36 09•September•2020