Page 16 - FSUOGM Week 42

FSUOGM INVESTMENT FSUOGM

Rosneft's board signs off on

$10.4bn bond sale

RUSSIA ROSNEFT’S board of directors has approved Besides low prices, Rosneft has also had to
a plan to raise up to RUB800bn ($10.4bn) cut its oil production as part of the OPEC+ deal
This marks the oil from the sale of 10-year corporate bonds to between Russia, Saudi Arabia and other major
giant's third such domestic investors, as the company grapples producers. Members of the oil cartel are due to
offering since 2014. with weaker margins amid low prices and bring back a further 2mn barrels per day (bpd)
weak oil demand. of supply at the start of 2021, but there are signs
This marks the Russian oil giant’s third such they might reconsider given the re-emergence of
offering since 2014, when it had to scramble lockdown measures over the past month.
for cash after being placed under EU and US Russia’s government is no longer Rosneft’s
sanctions in response to Russia’s annexation of majority shareholder, meaning that investors
Crimea. There are nearly RUB3 trillion of the may not be able to count on state support if Ros-
company’s ruble-denominated bonds still in neft misses repayment deadlines. The govern-
circulation. This enabled it to reduce its debts to ment’s stake shrank from just over 50% to 40.4%
Western banks to some $31bn by the end of June. in March, after one of Rosneft’s subsidiaries
By reducing its foreign-denominated debts, received 9.6% in return for the producer ced-
Rosneft is making its business more resilient to ing its Venezuelan operations to a state-owned
currency volatility. company.
Rosneft posted its first quarterly loss since That shareholding has now expanded to
2012 for January to March, reflecting the collapse 10.2%, as Rosneft has continued an aggressive
in prices and hefty impairment charges. But it buyback programme. Many oil companies can-
bounced back in the second quarter, generating celled such programmes after oil prices collapsed
a net profit of $0.7bn. earlier this year. ™

KMG, Lukoil agree rights

at Caspian block

CASPIAN KAZAKHSTAN'S state-owned KazMunayGas conditions for carrying out the project last year.
(KMG) and Russia's Lukoil have signed an agree- Kazakhstan has been trying for decades to
The pair are already ment defining rights and obligations within the develop its offshore oil and gas resources with
close partners. Al-Farabi project located in the Kazakh section the help of international investors. But so far the
of the Caspian Sea, Lukoil said in a statement. only project to make it to production has been
The document was signed by Lukoil CEO Kashagan, and only after years of delays and sig-
Vagit Alekperov and chairman of KMG’s man- nificant cost overruns.
agement board Alik Aidarbayev. The accord However, the government reformed its tax
brings the two companies one step closer to policy in 2018 in an effort to make offshore
signing a development contract for Al-Farabi, projects more attractive. In addition to Lukoil,
formerly known as the IP2 block. Italy's Eni is also in talks to develop offshore
The pair are currently waiting for KMG to acreage.
receive rights to subsoil use at the block. They Lukoil and KMG are already close partners,
also aim to establish a joint venture, in which working together at the onshore Karachaganak,
KMG will hold 50.01% and the remaining stake Tengiz and Kumkol projects in Kazakhstan,
will go to Lukoil. as well as at the Caspian Pipeline Consortium
Al-Farabi spans 6,000 square km and is (CPC) that ships Kazakh oil westwards to mar-
located 130 km from Kazakhstan's coastline. It kets. They are also partnered at the Khvalnskoye
is adjacent to the Zhenis block — another pro- and Tsentralnoye fields straddling the border
ject involving Lukoil and KMG. The site has a between the Russian and Kazakh waters of the
water depth of 300-400 metres. Its recovera- Caspian Sea. However, these projects have seen
ble resources are estimated at 15.1mn tonnes little movement in years, because of their long
(111mn barrels). distance from shore and an unresolved dispute
KMG and Lukoil agreed on the basic over the Caspian Sea's legal status.™

P16 www. NEWSBASE .com Week 42 21•October•2020