Page 117 - RusRPTNov19

complies will all state requirements for oil quality. The head of the pipeline operator Nikolay Tokarev told Kommersant daily that Rosneft was "bluffing" as it itself would be unable to comply with oil quality parameters it suggests to impose.
Rosneft and Neftegazholding are considering selling 15-20% of the artic focused Vostok Oil after the project receives tax reliefs . The Vostok Oil project might include the Payakhskoye (Neftegazholding), Lodochnoye, Tagulskoye, Vankorskoye and Vostochno-Taymirskiye fields (all Rosneft), as well as Rosneft’s JV with BP, Ermak Neftegaz. The initial negotiations with potential investors have already taken place, noting that it is not clear yet whether there will be a single acquirer or a few. However, according to the paper, investors are only willing to participate in the project once the uncertainty over tax reliefs for Vostok Oil has been cleared up. According to one of Vedomosti’s sources, Vostok Oil is valued based on reserves at $15bn (870mnt of reserves and 2.6bnt of resources).
In September 2019, Sberbank’s RAS earnings were flat y/y at RUB72.1bn , implying 20.9% ROE. The solid net provision release and accelerated growth of net F&C income supported the bottom line, while 3mo rolling NIM was up 8bp m/m. In 3Q19, earnings totalled RUB221bn with ROE of 21.8%. While the acceleration in net fees and commissions (F&C) income growth closer to the FY19 guidance and the positive result on cost of risk (CoR) (supported by RAS accounting and a stronger RUB), NIM’s performance remains weak. The results are seen as mixed, with the quality of earnings deteriorating, and await management’s updated FY19 guidance during the 3Q19 IFRS reporting on 31 October 2019. VTBC reiterated its 12-month Target Price for ords of RUB390 and Buy recommendation (84% ETR)
● Novatek
Russia’s privately owned LNG producer Novatek reported record high profits of $5.95bn in the third quarter of this year thanks to an extra $5.7bn revaluation gain following the sale of a 30% stake in its Artic LNG2 project to Chinese and Japanese companies earlier this month, the company said in a press release on October 30. Novatek has been making steady progress in developing Russia’s LNG business and its stock has been a big winner, almost doubling in value last year . The one-off gain won’t be repeated unless more stakes in the project are sold and the underlying results were more mundane. Despite flat q/q gas production of 18.3bcm the company’s sales were seasonally down with 0.4bcm build up in inventories, flat condensate and oil output to 3.0mmt. As a result natural gas sales including LNG amounted to 16.7bcm, which represents a 11% drop q/q, while liquids sales were 3% higher q/q at 3.06mn tons, reports BCS Global Markets . Exports were down too to 3.04bcm of LNG, a 16% drop q/q. That pushed third quarter revenues down by 12% q/q to $2.9bn – broadly inline with consensus. However, the volatility on international markets in the prices for gas (which are at historically low levels) and LNG were offset to some extent by stable domestic sales of gas.
The owner of four tankers servicing the liquefied natural gas (LNG) Yamal of Russian gas major Novatek is exempt from the latest round of the US sanctions , RBC business daily reported on October 22. Novatek feared setbacks caused by the US sanctions imposed on Chinese shipping company Cosco. Novatek's first LNG plant Yamal risks losing third of its LNG tanker fleet, as six Arc7 vessels are owned by Cosco and Canadian Teekay.
117 RUSSIA Country Report November 2019 www.intellinews.o