Page 142 - RusRPTJan21

9.2 ​Major corporate news 9.2.1​ Oil & gas corporate news
● Gazprom
Gazprom​ is considering selling a stake in Gazprom Neft on the market once interest in the oil sector recovers, ​Interfax reported on December 1, citing Gazprom Neft CFO, Alexei Yankevich Gazprom Neft's free float is currently 4.2% and market capitalization is $20bn. An increase in the free float would be positive for the company's valuation. We currently assume a 2 pp equity premium for low liquidity in Gazprom Neft COE. Removing this premium would increase the company's fair value by around 25%, based on our model. Gazprom has always been reluctant to discuss reducing its 96% holding in Gazprom Neft. As the main reason for the placement Yankevich mentioned the planned inclusion of Gazprom Neft in the indexes, which requires at least a 10% free float. However, we think that the justification for a stake sale would have to be much stronger than simply index inclusion. We think that Gazprom might be potentially looking at this as a way to reduce financial leverage. Right after the CFO's comments about a potential SPO, the company officially commented that this was a hypothetical scenario that did not represent actual plans at the moment. Nevertheless, we believe that even a hypothetical discussion of an SPO at the top management level indicates a probability that it could become a viable option at some point.
Russian gas giant​ ​Gazprom​ has created a subsidiary Gazprom Vodorod (Hydrogen) for hydrogen power generation projects​, and it is already considering pilot initiatives, Alexander Ishkov, head of Gazprom’s energy saving and ecology department, said in a conference late on Tuesday. “I would like to say that we are not only discussing these issues now, we’ve created a special organization within Gazprom with the functions, which is called Gazprom Vodorod. We are inviting everyone to cooperate with the organization,” he said. He also named some pilot initiatives of the company. “One of these options is construction of a large plant for methane pyrolysis at the exit point of the Nord Stream pipeline (in Germany). The carbon footprint here will stand at 1.2–1.6 kilogram CO2 per kilogram of hydrocarbon. This is almost three times lower that the E.U. threshold for low-carbon hydrogen,” he said. “There is another project, which I think no one has discussed yet, but the mining university and others could have done it. It is about analysis of possibilities of reversing CO2 transportation to Russia to get hydrogen through cheap traditional methods like methane conversion. We could transfer CO2 back to Russia for disposal or storage using the existing infrastructure.” The latter project has not been calculated yet, but it should provide cheaper hydrogen for the E.U. without spending on infrastructure for electrolysis and renewable power generation. Currently, Gazprom produces around 360,000
142 ​RUSSIA Country Report​ January 2021 www.intellinews.com