Page 11 - FSUOGM Week 10 2021
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FSUOGM                                        INVESTMENT                                           FSUOGM


       Volga Gas board accepts takeover




       bid from Russian group




        RUSSIA           THE board of directors of London-listed junior  is anticipated to be a formality.
                         Volga Gas has accepted an offer of $25mn from   Volga Gas produced 3,616 barrels of oil equiv-
       Volga Gas produces oil   Russian investment company GEM Capital to  alent per day (boepd) last year, most consisting
       and gas in southern   buy the company.                 of gas and condensate. But in August last year it
       Russia.             Volga Gas, which produces oil and gas in  said it would shift the focus of its investment to
                         southern Russia, said GEM had offered to buy  higher-margin crude oil.
                         92% of its shares. GEM also intends to delist   GEM Capital director Thomas Keane laid out
                         Volga Gas from the London Stock Exchange  the reasons for the firm’s interest in the producer
                         (LSE) and buy all outstanding shares in the  last year.
                         company.                               “Volga Gas has significant potential but given
                           “Given that the offer is now wholly uncon-  its size, operating environment and geographical
                         ditional, the board of Volga Gas recommends  focus, it would fare far better as a private com-
                         that Volga Gas shareholders who have not yet  pany with a simplified and more cost-effective
                         accepted the offer now do so promptly,” Volga  structure, while benefiting from our support and
                         Gas said.                            assistance,” he said.
                           Volga Gas launched a strategic review in April   GEM is owned by a former executive at
                         last year. In addition to low prices, the company  Gazprom’s  regional  gas  distribution  arm
                         has also been struggling with flagging produc-  Gazenergoset, Anatoly Paly, and has already
                         tion levels in recent years. It later revealed it was  acquired stakes in specialised chemicals,
                         in talks with several parties about selling all or  nanomaterials, computer gaming and tech
                         part of its business.                firms, including messenger application Tel-
                           The deal will also need approvals from  egram. It raised some $120mn from uni-
                         authorities in the UK and Russia, as well as back-  dentified investors in 2019 for Russia’s first
                         ing from 75% of Volga Gas’ shareholders, but this  block-chain platform.™
                                                   PERFORMANCE




       Russian oil output inches down in February





        RUSSIA           RUSSIAN crude oil and condensate supply  Output at Lukoil amounted to 1.447mn bpd, up
                         inched down 0.8% month on month in Febru-  1.4% m/m, while Surgutneftegaz’s extraction
       Rosneft and its   ary, preliminary data from the country’s energy  rate increased by 0.7% from January to 1.064mn
       subsidiary Bashneft led   ministry shows, primarily owing to a decline at  bpd. Gazprom Neft lifted 792,000 bpd of oil, up
       the decline.      fields controlled by state-owned Rosneft and its  2% m/m, while Tatneft flowed 523,000 bpd, up
                         subsidiary Bashneft.                 1% m/m.
                           National production averaged 10.054mn   Excluding condensate, Russian oil output
                         barrels per day (bpd) during the month, which  came to 9.33mn bpd in January and the figure for
                         also marked a 10.6% drop year on year. Rus-  February is not yet available. Assuming conden-
                         sia and other OPEC+ members committed to  sate production remained stable, though, VTB
                         record supply cuts last April to offset corona-  Capital (VTBC) estimates that Russia produced
                         virus' (COVID-19) impact on oil prices. But  9.26mn bpd of crude last month, in line with its
                         they have gradually been bringing back supply  OPEC+ quota.
                         since then.                            “We think the reduction in Russia’s crude
                           Supply at Bashneft, a mid-sized oil company  production in February is a technical issue,”
                         bought by Rosneft in 2016, slumped 17.8% in  VTBC said in a note. “So, the country would be
                         February to 190,000 bpd. This was barely above  able to grow its oil output quickly if the quotas
                         half what the Bashkortostan-based firm pro-  are eased, as per the OPEC+ agreement.”
                         duced in February last year. Production at Ros-  Besides at Bashneft, Rosneft cut back supply
                         neft, excluding Bashneft contributions, averaged  primarily at fields operated by its Orenburgneft,
                         3.39mn bpd, down 1.5% m/m and 12.6% year  Nyaganneftegaz and Udmurtneft subsidiaries.
                         on year.                             This was offset by increases at Gazprom Neft’s
                           These losses were offset by gains at Lukoil,  Noyabrskneftegaz fields and Lukoil’s deposits in
                         Surgutneftegaz, Gazprom Neft and Tatneft fields.  the Komi region and Western Siberia. ™



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