Page 9 - FSUOGM Week 04 2021

FSUOGM INVESTMENT FSUOGM

Gazprom places $2bn in eurobonds

at record-low rates

RUSSIA RUSSIA'S natural gas giant Gazprom placed notes. The company will see 3 issues mature in
8-year eurobonds worth $2bn yielding 2.95%, 2021 – $600mn in January, CHF750mn in Feb-
Gazprom is the first marking a record-low rate not only for the com- ruary and €500mn in November – and BCS GM
issuer to tap the pany itself, but for any Russian issuer of bonds believes Gazprom may seek to refinance matur-
eurobond market in over 5 years maturity, Vedomosti daily reported ing debt on the bond market.
2021. on January 20 citing the VP of Gazprombank, Gazprom’s free cash flow (FCF) is expected
Denis Shulakov. to be slightly negative in 2021 at around -$2bn.
Gazprom is the first Russian issuer to tap the "Combined with significant dividend payments,
eurobond market in 2021 and its issues usually this may further increase the need for external
serve as benchmark for other borrowers. funding. The company announced borrowing
The book for the eurobonds was 75% over- plans for 2021 worth $6.9bn (RUB511.6bn), so
subscribed, with the yield lowered from the more eurobond issuances can be expected this
initial guidance of 3.25%, despite the spike in year," the analysts argue.
sanction pressure against Gazprom's pipeline to However, given increased geopolitical ten-
Germany, Nord Stream 2. sions, BCS GM cannot rule out the risk of greater
BCS Global Markets analysts ahead of sanctions on Gazprom’s international projects.
the issue expected the final yield to be 2.8- The investigation into recent hacker attacks
2.9%. Gazprom has the largest amount of against US companies and the detainment of
eurobonds among Russian corporate issuers, dissident Alexei Navalny may become a pretext
they remind. for increased tensions between Moscow and the
"As of 3Q20, Gazprom had a fairly comfort- West and exert pressure on Gazprom’s eurobond
able debt maturity profile with just $8.4bn in curve, potentially causing a sell-off in the notes,
short-term debt (13% share of total)," BCS GM they warn. ™

Premier farms down at Tuna

PSC to Zarubezhneft

INDONESIA UK oil producer Premier Oil has completed barrels of oil equivalent (boe) in size. Premier
the farm-down of its interest in the Tuna pro- then signed a memorandum with Indonesia’s
Zarubnezheft is making duction-sharing contract (PSC) off Indonesia to upstream regulator SKK Migas in November
its foray into Indonesia. Russia’s state-owned Zarubezhneft. 2017 covering future gas sales from Tuna to
The deal was closed after approval from Vietnam.
Indonesia’s government and has left Premier This marks Zarubezhneft’s first foray into
with a 50% operating stake in Tuna PSC, while Indonesia. The company is a major offshore
Zarubezhneft has the remaining 50%. Zarubezh- player in neighbouring Vietnam through its
neft has agreed to cover Premier’s share of the Vietsovpetro joint venture with Zarubezhneft.
cost of a two-well appraisal campaign, slated to The rest of its major assets are in Russia, although
start in the second quarter of 2021. it is also exploring for oil in Cuba.
Premier also said it had received government Zarubezhneft is looking to expand into other
approval for a one-year extension of the Tuna countries, but has suffered setbacks. It unsuc-
PSC exploration period until March 2022. cessfully took part in a licensing round in Ecua-
Premier entered the Tuna PSC in 2007 after dor in 2019 and had set its sights on a project in
filing a winning bid in an Indonesian licensing Iran, but was forced to withdraw after US sanc-
round. It secured operatorship and a 65% stake tions were introduced. It signed a memorandum
in the project, while Japan’s Mitsui Oil Explo- last year for upstream activities in Algeria.
ration and South Korea’s GS Energy obtained Premier already produces gas at Indonesia’s
shares of 20% and 15% respectively. offshore Natuna Sea A block and is exploring for
Premier sank two wells in 2014 at the site, more in the country’s South Andaman Sea play,
near the maritime border between Indonesia in partnership with the UAE’s Mubadala Petro-
and Vietnam, yielding the Kuda Laut and Singa leum. The company is currently in the process of
Laut oil and gas discoveries, assessed at 100mn merging with fellow UK producer Chrysaor. ™

Week 04 27•January•2021 www. NEWSBASE .com P9