Page 77 - RusRPTJune18

9.2 Major corporate news 9.2.1 Oil & gas corporate news
Troubled Chinese private firm China Energy Company (CEFC) is out of the deal to acquire 14.16% stake in Russia's largest oil company Rosneft, oil trader Glencore said on May 4 . CEFC was rocked by investigations at home and missed the April 1 deadline to pay a €1.5bn instalment , putting the largest Russo-Chinese deal in question. QHG Oil, the consortium of Glencore and Qatar Investment Authority, the holders of the Rosneft stake, has "sent a notice to CEFC to terminate that agreement in accordance with its terms and accordingly that proposed sale will no longer proceed," Glencore said. With the CEFC out, Glencore and QIA "have agreed to dissolve the Consortium originally put in place in December 2016 for the purposes of acquiring a 19.5% stake in Rosneft" to take direct ownership of the underlying Rosneft shares. Effectively, the Qatar controlled QIA will hold 14.16% stake in Rosneft and Glencore 0.57%.
Russia's natural gas giant and pipeline exports monopolist Gazprom posted RUB2.14 ($34bn) trillion of IFRS revenues in the first quarter of 2018 , up by 11% quarter-on-quarter and beating consensus expectations by 3%. The company's revenues were "expectedly supported by the strong macro environment, as the higher oil price was reflected in a rally in European gas prices (spot quote $274/mcm, +16% q/q), as well as a 3% q/q hike in non-FSU [Former Soviet Union] shipments to 54bn cubic meters," Aton Equity commented on May 30. The abnormally high level of supplies to Europe is explained by extremely cold weather at the end of first quarter , Aton reminds. Gazprom's Ebitda in the first quarter reached RUB626bn, beating the consensus by 5%, on the back of the revenue growth and seasonal decline in capital expenditure (capex down 8% q/q to RUB1.65 trillion). Bottom line of RUB372bn was 7% above consensus, although slightly undermined by a higher FX loss (minus RUB21bn in 1Q18 vs minus RUB4bn in 4Q17).
The European Commission (EC) closed the anti-trust investigation into Russian gas giant Gazprom , according to May 24 press release . Notably, the EC decided not to fine Russian gas pipeline monopoly. Gazprom agreed to comply with several conditions put forward by the EC, such as to provide its Eastern European clients (Bulgaria, Slovakia, Poland and the Baltics) the ability to revise the contract terms regarding prices, as well as to make gas swaps, if their contracts have maturity of more than one year. "We deem the news as positive for sentiment on Gazprom, and despite the immediate positive market reaction, we think that the market anticipated the decision, with the stock correcting back during the day yesterday," VTB Capital commented on May 25. VTB reminds that the company has already provided some commitments to the EC to settle the antitrust case back in March 2017, and they proved to be close to the EC’s subsequent final requirements. The bank notes that the base case forecast does not incorporate any reserve bookings with regards to potential fine payments, "so the results of the investigation have no any effect on our company valuation." Earlier this year Stockholm arbitration court ordered Gazprom to pay Ukrainian Naftogaz $2.56bn in compensation in a long running row over supplies and transit fees and reduced the contractual supplies of gas by Gazprom to 5bn cubic meters (bcm) from 2018.
77 RUSSIA Country Report June 2018 www.intellinews.com