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Serbian NIS’ H1 net profit at of this year we have invested a total of Investment bank Morgan Stanley warned this
RSD8.6bn,” Kirill Tyurdenev, general director week that low inventories and the imminent
RSD6.08bn of NIS, said. arrival of the winter heating season leave
room for further upside volatility for gas and
NIS Group is one of the largest vertically
Naftna industrija Srbije (NIS) Novi Sad, one integrated energy companies in Southeast LNG prices.
of the largest Serbian companies, reported a Europe. The main activities of the company This comes after gas and LNG
net profit of RSD6.08bn (€51mn) in the first consist of exploration, production and benchmarks have surged to multi-year
six months of 2021, the company said in a refining of oil and natural gas, sales and highs as a result of rebounding demand
statement. distribution of a wide assortment of and constrained supply. In particular, Asian
This is a significantly better result than petroleum products, as well as the realisation LNG and EU gas prices have rallied tenfold
the first half of last year, when a loss of of projects in the fields of petrochemistry to near $20 per million British thermal
RSD10.2bn was recorded, the company and energetics. units ($553.20 per 1,000 cubic metres), the
added. In addition to Serbia, NIS is also investment bank noted. They have set new
“In the first six months of 2021, NIS developing its business in the Balkan region. seasonal and all-time price records in the
operations have been affected by the Regional expansion is taking place in two process.
consequences of the COVID-19 pandemic. main directions: in the field of oil and gas US gas prices remain largely decoupled
The company’s focus was on improving exploration and production in Romania from the rest of the world, but Morgan
business efficiency, financial discipline and and Bosnia & Herzegovina and through the Stanley said that Henry Hub benchmark
investment in key development projects, development of a retail network in Bosnia, prices have nonetheless risen threefold
which resulted in a significant improvement Bulgaria and Romania). to around $5 per mmBtu ($138.30 per
in financial results compared to the same In the Balkans market, NIS manages a 1,000 cubic metres). The supply-demand
period last year,” said NIS. total network of over 400 petrol stations, picture for each market is similar, with low
“Better macroeconomic parameters, under two brand names — NIS Petrol and inventories, constrained near-term supply
primarily the recovery of economic activities the premium brand Gazprom. On top of that, and growing demand, according to the
and the growth of consumption of petroleum NIS is active in the field of electricity trade investment bank.
products, also contributed to the better as well, where, in addition to the Serbian Looking ahead, Morgan Stanley sees
results of NIS. The growth trend was also market, it is also present in the markets of potential for upside volatility, especially in
recorded by the value of oil, so the average Bosnia, Hungary, Montenegro, Romania and the event of colder-than-normal weather or
price of Brent oil in the reporting period Slovenia. further disruptions to supply.
was $64.9 per barrel, which is 63% more The majority owner of NIS is the Russian China, South Korea and Brazil led the
compared to the comparable reporting company Gazprom Neft, which in 2009 rise in LNG demand in July and August,
period last year,” it added. bought 51% of the shares. Morgan Stanley said. It noted that Chinese
Ebitda amounted to RSD22.2bn, which is demand was underpinned by structural
an increase of almost ten times compared to growth in consumption, but that in South
the same period last year when this indicator Lithuania’s fertiliser producer Korea and Brazil, transitory factors such as
amounted to just RSD2.3bn. hot weather and outages among other energy
During the first six months of 2021, there reduces capacity by half sources had at least a partial impact.
was an increase in sales revenue of 35% In Southeast Asia, the bank has observed
compared to the same period last year to Lithuania’s nitrogen fertiliser manufacturer some switching to alternative fuels such as
RSD115.7bn. Achema, the Baltics’ single largest natural fuel oil and coal beginning to occur. This
In the reporting period, NIS recorded a gas consumer, holds one of its two ammonia relates to concerns that others have raised
significant improvement in the operating units offline after the completion of the in the past over what will happen if the
cash flow indicator, which was at the level of summer’s annual maintenance. decarbonisation of LNG becomes too costly,
RSD14.5bn, or 132% more than last year. The reason for that is a surge in gas causing developing countries in particular to
NIS Group’s liabilities based on taxes market prices, which has forced the company turn to cheaper alternatives at the expense of
and other public revenues amounted to to reduce production. the energy transition.
RSD95.4bn, which is an increase of 14% Achema CEO Ramunas Miliauskas said On the supply side, Morgan Stanley
compared to the first six months of 2020. on September 17 that record gas prices said export utilisation rates have remained
The company pointed out that the success are posing major challenges for nitrogen weak, at around 82% on average in July
was recorded in most operational indicators. fertiliser producers worldwide. and August compared with 90% normally.
In the first six months of 2021, the Pancevo “Achema is carefully weighing possibilities Supply from Qatar averaged 6.5mn tonnes
Oil Refinery processed 1,714 thousand for its future operations and adjusting its over that period, down 5% year on year, the
tonnes of crude oil and semi-finished product basket,” he said. “Due to the current bank noted, also identifying a lack of recent
products, which is 5% more than in the same difficult market conditions, it was decided exports from Peru LNG and upstream issues
period last year. to temporarily suspend the relaunch of one in Nigeria and Trinidad and Tobago. Looking
When it comes to sales, the total sales of of the ammonia units on completion of the ahead, it warned of maintenance in the US
petroleum products in the reporting period scheduled maintenance.” and Australia that could continue to weigh
amounted to 1.8mn tonnes, which is an The plant’s annual schedule maintenance on global export capacity utilisation.
increase of 13% compared to last year. was completed in early September. Morgan Stanley said it expected prices
Furthermore, NIS said it remained to “re-anchor” with fundamental drivers
committed to further development and such as supply costs and demand erosion
modernisation of its retail network. Morgan Stanley warns thresholds by mid-2022. It continues to
“We remain committed to the anticipate a multi-year upcycle until around
development of our company. Along with of further gas, LNG price 2025, though, as demand continues to
the constant increase in business efficiency, outpace supply..
we are also implementing a large investment volatility risk
programme, and in the first six months

Week 38 23•September•2021 www. NEWSBASE .com P15