Page 14 - FSUOGM Week 49 2019

FSUOGM
NEWS IN BRIEF
FSUOGM
RUSSIA
Gazprom sends mixed signals on dividends
Russian gas giant Gazprom will pay 30% of IFRS net profit in dividends for 2019, according to the report by Interfax, increasing the payout to 40% in 2021 and to 50% in 2022.
As reported by bne IntelliNews, Gazprom shares rallied in June after the management pledged to revise the company’s dividend strategy upwards.
The following two SPOs of the company with mystery buyers prompted speculations that new strategic investors could be motivated by potential cash distribution through dividends. However, the most recent report
is not in line with the pledge to increase the dividend payout to 50% by 2021.
In addition, the “intention to pay 30% for 2019 looks negative, as it implies 20% lower 2019 estimated DPS (dividend per share) y/y and just 5.4% DY (dividend yield), BCS Global Markets commented on December 4.
Such DY is “visibly lower compared to other Russian oil producers, which boast similar DPS CAGR (Compound Annual Growth Rate) in the future,” BCS added.
Gazprom’s pledge to increasing the dividends to 50% of IFRS net profit required by the government from major state-owned enterprises (SEOs) was seen as a major shift in policy, as previously Gazprom repeatedly dodged the requirement.
For 2018 the board recommended to pay RUB393bn, record-high in absolute terms, but making only 25.7% of net profit. Should the company pay 30% of IFRS net profit for 2019, that would actually make a decline in DPS, from RUB16.6 per share in 2018 to RUB13.5 per share in 2019.
bne IntelliNews, December 4 2019
US arrests two Russians
for sanction busting for
Gazprom Neft
Recent arrests of five people in the US, including two Russian nationals, are linked to sanction-busting for Gazprom Neft, the oil arm of Russian natural gas giant Gazprom, Kommersant daily reported on December
4 citing the court documents and unnamed sources.
Reportedly, the arrests are linked to supplies of power turbine Vectra 400G produced by the American Dresser-Rand for the offshore field Prilazlomnaya operated
P14
by Gazprom Neft. Supplies of extraction equipment to Russia for deepwater, offshore, and shale projects is limited by the sanctions.
The Russians accused of sanction violation and money laundering are Oleg Nikitin and Anton Cheremuhin of KS Engineering, who allegedly tried to re-sell the $6.5mn turbine through Europe with the final destination being declared as Kazakhstan.
Analysts surveyed by Kommersant believe that the case will further complicate the supply of foreign equipment to Russian oil and gas sector.
bne IntelliNews, December 5 2019
Gazprom, Norilsk Nickel
rent Rosatom’s icebreakers
for 10 years
Gazprom Neft, oil arm of Russia’s natural gas major Gazprom, and metals producer Norilsk Nickel are leasing out two atomic icebreakers each from Rosatom state atomic agency, RBC business portal reported on December 6 citing unnamed sources in the industry.
Notably, the companies are leasing the vessels until 2027, with the prolongation option
until 2029, instead of the usual five years. The industrial majors are reportedly hedging against possible deficit of icebreakers in case of spiking transportation volume on the Arctic Northern Sea Route.
As reported by bne IntelliNews, Rosatom aims to become one of the top 15 maritime shippers in the world, transporting cargo from South-East Asia to Europe via the Arctic Northern Sea route, competing with alternative routes on the Pacific and Indian oceans, the Suez channel, and the Mediterranean.
Rosatom maintains the only fleet of nuclear icebreakers in the world and is eligible to navigate the Northern Sea Route. Recently the state agency has teamed up with private Delo Group, also seeking synergies container and terminal assets to develop an Arctic container line.
The main projects that are planned to supply
the Northern Sea Route with cargo traffic are Novatek’s liquefied natural gas (LNG) projects Yamal and Arctic LNG-2, Vostok Ugol coal project of Dmitry Bosov (19mn tonnes of
coal), AEON of Roman Trotsenko (4mn
tonnes of coal), and Neftegazholding of Eduard Khudatainov (5mn tonnes of oil).
Analysts surveyed by RBC agree that should
all the projects be realised, the icebreakers for accompanying the cargo shipments in winter might indeed run into deficit.
bne IntelliNews, December 9 2019
Lukoil estimates Ediru’s oil at 500mn tonnes
Preliminary recoverable oil reserves of the Eridu block in Iraq amount to 500 million tonnes, Ilya Mandrik, vice president for exploration and development at Russian oil major Lukoil, told reporters on December 10.
“The plan (for the development of Eridu) includes drilling of 9 exploratory and appraisal wells. We have done all the seismic works now, and drilling of the seventh well is going on. We will finish the plan in the first quarter of 2020, and we are to appraise the wells after that. It is too early to speak about a final estimate, but
we can definitely say it amounts to about 500 million tonnes of recoverable reserves of oil,” he said.
“This is the largest discovery in Iraq over the past 20 years...We are obviously interested
and we are taking action to launch production as soon as possible, as reserves there are huge. Economics there is significantly better than at West Qurna-2,” he said.
Lukoil runs two projects in Iraq – West Qurna-2 and Block 10, or Eridu. Lukoil, which has 60% of the project, holds the right for geological exploration and further development together with Japan’s Inpex. The Iraqi government is represented by South Oil Company, the holder of the 25-year contract, which can be extended for 5 years.
December 10 2019
Sanctions on Nord Stream
2 will have no impact:
Russian foreign minister
The US introduced new sanctions against Russia’s Nord Stream 2 and Turkish Stream (aka TurkStream) pipelines, which were included into the new US military budget, but they will not stop those projects, Russian Foreign Minister Sergey Lavrov told reporters after his working visit to the United States on December 9.
“As far as the US military budget is concerned, it seems to me that at the moment the Congress is literally consumed by the desire to do everything within its powers to destroy our relations,” Russia’s top diplomat said. “The cause, started by the administration of Barack Obama, still lives on. But we are used to this kind of attacks, we know how to respond to them and
I assure you that neither Nord Stream 2 nor Turkish Stream will ever be halted.”
After delays caused by the Danish government the Nord Stream 2 is due for completion in May and Turkish Stream will come online in January.
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Week 49 11•December•2019