Page 102 - RusRPTNov18

2,723bn ($41.5bn). Revenues were up 8% Q/q at RUB 430bn ($6.56bn), but came below our estimate, while EBIT of RUB 124bn ($1.89bn) was up 9% Q/q. Net income dropped 27% Q/q to RUB 226bn ($3.5bn) due to the high base effect of 2Q18 (which saw earnings of RUB 374bn, or $5.0bn). Despite the discrepancy on the top line, the bottom line came in line within forecasts. The key reason for that was net other income (which comprises foreign exchange gains/losses), which was RUB 18.5bn ($0.3bn) higher than we had expected. Based on these results, we estimate that the dividend payment for prefs might reach RUB 6.90/share for 2018, with a dividend yield of 18.1%, if Surgutneftegas sticks to its dividend policy (implied 7.1% of RAS net income for preferred shares) and under RUB closing at 66.70 by the year-end (our base case year-end exchange rate forecast).
Saudi Aramco could become the second-largest shareholder of Arctic-2 liquefied natural gas project of Russian LNG runner-up Novatek , Tass reported on October 22 citing Saudi Minister of Energy Khaled Al-Falih, without specifying how much is planned to be invested. This confirms previous reports of Aramco considering the Arctic LNG-2 (ALNG-2) project of independent gas producer Novatek, as well as reports of at least $2bn joint natural gas projects.
Russian state oil major Rosneft has filed a complaint against the country’s second-largest oil producer, private Lukoil, to the Federal Antimonopoly Service (FAS), claiming that Lukoil is abusing its control of the Varandeysk terminal though which oil from the Trebs and Titov oilfield is being exported. Trebs and Titov, one of the largest oilfields in Russia, is developed by a joint venture of Rosneft (74.9%) and Lukoil (25.1%), and had 1.9mn tonnes of oil extracted in 2017 with a planned capacity of 4.8mn tonnes by 2020. Rosneft claims that Lukoil is charging too high a price for handling the oil at its Varandeysk terminal. The project is in a "difficult situation", the head of Lukoil Vagit Alekperov told the Vedomosti daily on October 1, white rejecting Rosneft's claims. According to Alekperov, Lukoil has justified the prices to the FAS, while previously suggesting several ways of settling the issue to Rosneft, all of which were rejected. Trebs and Titov was auctioned to a joint venture of Lukoil and Bashneft oil company in 2011, before Bashneft was effectively renationalised in 2014 and then re-sold to Rosneft . The state behemoth was also competing for the oil fields at the time.
Bulgaria’s state-owned natural gas supplier Bulgargaz and Russian giant Gazprom expect to agree on a cut in the gas delivery price in November, the Bulgarian company said . In September, Gazprom invited Bulgaria to renegotiate the natural gas prices it pays. Talks on lowering the price were launched after the European Commission completed an antitrust case against Gazprom concerning the high prices for gas deliveries to eight EU member states. Although Gazprom will not be fined for abusing its market dominance in Central and Eastern Europe, the company will have to comply with EU rules ensuring a more competitive gas market in the region, the European Commission said in May in a settlement decision ending its seven-year probe.
Polish PGNiG announced that the company had filed a lawsuit to the EU court on 16 October contesting the agreement between the European Commission and Gazprom from 24 May about the settlement of anti-monopoly claims, Kommersant reports. The agreement between the European Commission and Gazprom ended the anti-trust investigation that started in 2012. As we mentioned in our Morning Comment, of 25 May, the EC decided not to fine the gas monopoly, while Gazprom agreed to several conditions,
102 RUSSIA Country Report November 2018 www.intellinews.com