Page 9 - FSUOGM Week 08 2020

FSUOGM PIPELINES & TRANSPORT FSUOGM
Nord Stream 2 pipelaying vessel sets new course for Sri Lanka
RUSSIA
The vessel is due to be retrofitted with welding and technological equipment.
THE Gazprom-owned Akademik Cherskiy pipelaying vessel, which Russia has said could be used to complete the Nord Stream 2, is now heading to Sri Lanka after changing its course, ship tracking data shows.
The vessel, which left Russia’s Far Eastern port of Nakhodka on February 9, had been due to arrive in Singapore on February 22. But before reaching its destination the ship set a new course for the Sri Lankan capital of Colombo, according to online data providers Vessel Finder and Marine Traffic. Its estimated time of arrival is listed as February 24, although positioning data shows it is still traversing the Malacca Strait.
The Nord Stream 2 to Germany is around 93-94% complete, with less than 160 km of off- shore pipeline left to lay. But US sanctions led hired Swiss contractor Allseas to halt work on the project in late December. Russian Energy Minister Alexander Novak said in November that the Akademik Cherskiy – built by a Chi- nese shipyard in 2011 and acquired by Gazprom in 2016 – would be suitable to complete the pipeline.
Gazprom has not commented on why the vessel has travelled to the Asia-Pacific region. But both Singapore and Colombo have ship- yards, and in early February, state procurement
documents show that the company hired a con- tractor to retrofit the ship with new welding and technological equipment for RUB874mn ($13.4mn). The contractor’s identity was not disclosed.
Adding to the mystery, the documents stated that the upgrades were required so that Akade- mik Cherskiy could carry out work at fields off the eastern shore of Sakhalin Island, rather than at Nord Stream 2.
Russia does have other pipelaying vessels, such as the Fortuna, conveniently stationed in the Baltic Sea. But in the permit Gazprom obtained for Nord Stream 2’s construction in Denmark’s territorial waters – the only section of the pipeline left to complete – it is assumed that the vessels used will have dynamic posi- tioning capabilities. The Akademik Cherskiy has these capabilities, whereas the Fortuna does not. No other vessels have been mentioned as alternatives.
Nord Stream 2 had been due to start flowing gas to Germany and other countries in central European countries before the end of last year. But construction was delayed even before All- seas quit the project, after Denmark took much longer than expected to issue permits.
Russia now expects to complete the pipeline by late 2020 or early 2021. ™
PERFORMANCE
Rosneft contains earnings decline in Q4
RUSSIA
Turnover was up despite weak prices.
RUSSIA’S largest crude oil producer Rosneft reported $35bn in revenues in Q4 under IFRS, with sales up by 6% in the reporting quarter, with higher trading activity helping to offset 20% q/q lower fuel oil prices on average.
As a result, the company contained its Ebitda decline at 12% q/q at $7.7bn, exceeding con- sensus expectations by 4%. Rosneft’s net profit was 29% q/q lower at $2.5bn, but in line with expectations.
The company’s free cash flow adjusted for prepayments offsetting in Q4 remained flat q/q at $4.25bn, thanks to the positive effect of working capital release, and implied cash flow yield exceeded 20%, BCS Global Markets
estimated on February 19.
Since the company paid $3bn in 1H19 divi-
dends in Q4, net debt increased 5% q/q despite positive FCF and stood at c$46bn at the end of Q4, also affected by the ruble appreciation dur- ing the period.
BCS GM welcomed the results in Q4 and the double-digit cash flow yield, while reiterating the Buy recommendation on Rosneft’s shares with the target price of $10 per GDR.
The analysts suggest focusing on plans of future deleveraging, impact on the dividends, the tax exemptions for Vostok Oil and Priobskoye fields, potential international M&A activity, and the performance of Rosneft’s affiliates in 2020. ™
Week 08 26•February•2020 w w w. N E W S B A S E . c o m P9