Page 15 - bne_newspaper_July_19_2019

Eastern Europe
July 19, 2019 www.intellinews.com I Page 15
Russian oil companies ask for $40bn in tax breaks for Arctic development
Hydrocarbon extraction development in the Arctic would require RUB5 trillion to RUB8.5 trillion of investment, but Russian oil companies would need up to RUB2.6 trillion ($41bn) worth of tax breaks to develop the region, Vedomosti daily reported on July 15, citing a letter from head
of Rosneft Igor Sechin addressed to President Vladimir Putin and backed by KPMG calculations.
Since Western sanctions have limited exports of extraction technology and complicated joint ven- tures with foreign energy majors, discussions are ongoing as to whether Russia's largest compa- nies will be able to maintain stable long-term oil output with Siberian brownfields alone, without tapping into challenging Arctic offshore fields.
About 60% of all Russian energy resources are concentrated in the Arctic regions, Energy
Minister Alexander Novak estimated in 2017. In 2018, Rosneft announced that it discovered more oilfields in the eastern Arctic region.
Previous reports have claimed that "Oil czar" Sechin has already requested that Putin support the creation of an Arctic hydrocarbon extraction cluster. Sechin's Rosneft has another interest in Arctic sea transportation, as it controls Russia's largest icebreaker shipyard Zvezda.
In the latest request, Sechin reportedly proposes the Vostok oil project, arguing that the cost of financing in Russia currently stands at 11-12%, which requires the attraction of foreign investors, who in turn are interested in long-term fiscal conditions.
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Ukraine's natural gas monopoly raises €600mn, $335mn via Eurobonds placement
Ukraine's natural gas monopoly Naftogaz has successfully placed Eurobonds totalling €600mn and $335mn.
The placement was executed on July 12. Five-year euro-denominated bonds at 7.125% and three-year US dollar-denominated bonds at 7.375% were launched, the company said in a statement the same day.
Naftogaz placed Eurobonds for the maximum amount approved by its shareholder, the Ukrainian government, and at "a rate below the approved
ceiling". The Eurobond issues do not carry a state guarantee, according to the statement.
The issue was approximately 2.5-times oversub- scribed. The company expects to see the funds on 19 July, following the completion of legal formali- ties. Citi and Deutsche Bank acted as lead manag- ers on the issue. Freshfields Bruckhaus Deringer, AEQUO, White & Case, Avellum, Linklaters and Clifford Chance provided legal advice.
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