Page 146 - RusRPTJan21

● Novatek
Novetek to produce hydrogen​. Yamal LNG is taking steps to decrease its CO2 footprint. Kommersant reported. Yamal LNG is converting one of 8 Siemens power generation units to run partially on hydrogen, which Kommersant’s sources say will be produced at a pilot plant on-site. Adding to Novatek’s ESG attractiveness. As a reminder, Novatek’s management stated on its 3Q20 call that it could begin storing CO2 at Yamal LNG by 2022, which presumably would be produced by the production of ‘blue’ hydrogen by steam reformation of natural gas. All of this appears to be aimed at reducing Yamal LNG’s CO2 footprint by 5% by 2030, a Novatek target. ‘Green’ hydrogen by electrolysis of water using renewable energy may be produced later using wind generation, Kommersant added. Although Yamal LNG may eventually export hydrogen to Europe for profit, we think the largest impact on the stock price would come by making Novatek relatively more attractive to investors vs other EM oil & gas companies. Novatek’s ESG score was only this week raised from BBB to A by MSCI. Novatek’s initiative to begin producing and using hydrogen at Yamal LNG, and storing the resulting CO2 on-site, may further increase its ESG score relative to its peers, improving its attractiveness to investors.
● Other
Transneft​ held a conference call on its 3Q20 results. The key takeaways are given below.
· The transportation tariffs for 2021-30 are to be based on 99.9% of the projected average annual consumer price index.
· The long-term capex guidance is close to the maintenance level, or RUB210- 230bn annually.
· Some $143.6mn has already been paid in compensation for the oil contamination, which is more than half the total planned amount. The rest might be paid by mid-2021.
· According to the company, paying 50% of IFRS net income is a clear and transparent dividend policy. The potential choice between FCF and NI is not an appropriate policy, the company believes. However, the final decision on the dividend policy is up to the main shareholder. The official dividend policy is to be revised once the corresponding government decree has been received (planned by May 2021).
· The contribution of the 4Q20 results to the FY20 dividend might be similar to that of the 3Q20 results, as management expects them to be close to those for 3Q20.
146 ​RUSSIA Country Report​ January 2021 www.intellinews.com