Page 11 - FSUOGM Week 43 2021

FSUOGM PROJECTS & COMPANIES FSUOGM

Gazprom to build up $10.2bn risk fund

RUSSIA RUSSIA’S Gazprom announced on October 19 implying yields of 11% and 12% respectively.
it would be a reserve fund worth RUB726bn
Gazprom typically uses ($10.2bn) by the end of the year to manage Sanctions talk
a conservative gas potential risks, even while it generates record Gazprom could come under additional sanc-
price to calculate its gas revenues on the back of a surge in prices over tions pressure after fresh US calls to imple-
investment in a given recent months. ment sanctions on the Nord Stream 2 project,
year. The deputy chairman of Gazprom’s man- although analysts doubt that this will cause any
agement committee, Famil Sadygov, said the serious problems.
fund would provide “necessary budget strength During a hearing on the US Treasury Depart-
and resistance to volatility in the external ment’s sanctions policy on October 19, Republi-
environment.” can Senator Pat Toomey put pressure on Deputy
Gazprom has approved its 2021 investment Treasury Secretary Wally Adeyemo on why the
programme at the previously announced level of Biden administration had not implemented
RUB1.19 trillion, Sadygov said, which includes sanctions imposed on the Nord Stream 2 pipe-
RUB1.02 trillion of capital expenditure. This fig- line under the Countering America’s Adversaries
ure is based on an average gas price of $269.6 per Through Sanctions Act into law. Biden himself
1,000 cubic metres, he said. has indicated that continued US pressure on
Gazprom typically uses a conservative gas Nord Stream 2 is pointless, as Germany remains
price to calculate its investment in a given year. a staunch supporter of the pipeline and Wash-
Wholesale gas prices have spiked in recent ington needs to prioritise its relationship with
months, reaching almost $2,000 per 1,000 cubic Berlin.
metres at the Dutch TTF hub on October 6. The “We’re committed to working with
price growth will have affected some of Gaz- you and this committee to hold Gazprom
prom’s long-term contracts, which factor in hub responsible for its activities that violate our
prices. sanctions,” Adeyemo said, but did not dis-
“Compared with the initial plan, the proceeds close details on how the Treasury Depart-
from gas sales have increased by almost 30%, ment would do this.
which will allow Gazprom to reach an historic “At this time, we do not expect additional
record level of revenues in 2021,” Sadygov said. sanctions pressure on Gazprom, although Nord
This comes after Gazprom recently Stream 2 AG could eventually be added to the
announced it had boosted gas flow to countries SDN list, as this is technically required by law
outside the former Soviet Union by 13.1% in the even though the entity was given an exception
year up to mid-October, to almost 152bn cubic earlier this year,” Sova said. “There have been
metres. bipartisan calls to follow through with sanc-
Gazprom also expects its EBITDA to almost tions on Nord Stream 2 AG, and such legislation
double to over $45bn this year, although ana- could be included in this year's National Defense
lysts at Moscow-based Sova Capital said this Authorization Act (NDAA). We believe Gaz-
figure was slightly below their forecast. Based on prom and Nord Stream 2 AG, along with Ger-
that, they have lowered their dividend per share many, are prepared for such actions from the
estimate from RUB45.6 to RUB39 per share, US.” ™

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