Page 10 - FSUOGM Week 13

FSUOGM PERFORMANCE FSUOGM
Russia may start importing fuel amid slump in European prices
RUSSIA
European prices are at a significant discount to Russian ones.
LOCKDOWN measures have caused gasoline prices in Europe to slump significantly below those in Russia, encouraging the latter to start importing supplies from the continent, Kom- mersant reported on March 31.
Gasoline in Russia costs at least RUB6,000- 8,000 ($76.90-$102.50) per tonne more than in Europe, the newspaper said. AI-92 and AI-95 gasoline on the St Petersburg International Mer- cantile Exchange (SPIMEX) cost RUB41,500 and RUB43,000 per tonne on March 30, down 3% and 4% respectively, according to Reuters. But taking into account taxes and the current ruble rate, imported gasoline in European Russia cost only RUB37,000 per tonne.
European gasoline prices have fallen 59% since the end of February, Moscow-based VTB Capital estimates, in line with a 55% decline in oil prices and weak demand as a result of lockdowns. Meanwhile Russian wholesale prices have dropped by only 27%, resulting in a premium.
Kommersant said the disparity was partly caused by a damper mechanism in Russian oil
taxation, which compensates producers for sell- ing fuel domestically when oil prices are high. When prices are low, as they are now, produc- ers must pay extra tax on sales, propping up domestic fuel prices and making imports more attractive.
“The dramatic drop in crude prices has turned the damper mechanism from a subsidy to oil companies into a payment to the govern- ment,” VTB said in a research note on March 31.
Current European gasoline prices imply a $217 per tonne damper payment, according to the bank, and the mechanism is based on a fixed ruble-denominated threshold that was also raised by RUB5,000 per tonne in 2020.
“This means that the damper payments do not depend on actual domestic wholesale prices,” VTB said, preventing oil companies from reduc- ing domestic wholesale prices any further.
Gazprom Neft is likely to suffer the most under these conditions, as it is most exposed to the domestic market, the bank said, whereas Sur- gutneftegaz is likely to suffer the least.™
Tatneft profits dip in 2019 on non- recurring items
RUSSIA
The company booked impairment and depreciation charegs at some of its assets.
MID-SIZED Russian oil producer Tatneft has reported a dip in profits for 2019 despite a growth in revenues, as a result of exceptional items.
The Tatarstan-based operator posted a con- solidated profit of RUB192.3bn ($2.97bn) for the year under international financial reporting standards (IFRS), down 9.2% year on year. Its EBITDA came to RUB291bn, down 1.1%, but adjusted EBITDA, excluding exceptional items, grew by 4.3% to RUB328.4bn.
Revenues climbed 2.4% to RUB932.3bn, while operating profit fell 3.4% to RUB254.3bn. Pre-tax profit was down 7.8% at RUB252.3bn, while free cash flow increased 3.4% to RUB153bn.
The revenue growth was supported by a 1% rise in oil production to 29.8mn tonnes (581,600 barrels per day, (bpd)). Like other Russian pro- ducers, Tatneft’s output was capped last year because of Russia’s OPEC+ supply quotas. Those quotas expired on April 1, allowing Russian oil firms to extract as much as they please.
Tatneft also produced 1bn cubic metres of gas during the year, up 9.1%. Its TANEKO refining complex produced 10.1mn tonnes of petroleum products.
Tatneft said its business was affected by impairments and depreciation charges at some of its assets, and it also blamed the decline in profits on an increase in costs and other expenses. In addition, its exports were affected by oil contamination in the Druzhba pipeline system last spring.
Tatneft produces most of its oil from a hand- ful of major Soviet-era oilfields in Tatarstan, the largest of which is the Romashkinskoye field, which currently flows above 300,000 bpd. The producer recently announced a $16bn invest- ment plan to boost recovery at Romashkinskoye, but said tax breaks were necessary to make the project feasible.
The Tatarstan region’s government owns a 36% stake in Tatneft, with the rest divided between mainly small, private shareholders. ™
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w w w . N E W S B A S E . c o m Week 13 01•April•2020