Page 19 - FSUOGM Week 35 2020

FSUOGM PROJECTS & COMPANIES FSUOGM

Nostrum defaults on interest

payments

KAZAKHSTAN KAZAKHSTAN-FOCUSED Nostrum Oil & interest on its 7.0% 2025 notes, although the
Gas is on the ropes after failing to pay interest on 30-day grace period has not ended yet.
Nostrum has struggled some of its debts. Nostrum once said Chinarevskoye could pro-
for several years with The company has struggled for several years duce as much as 100,000 barrels of oil equivalent
declining production with declining production rates at its main Chin- per day (boepd). But instead, output has fallen
rates and rising debt. arevskoye field in western Kazakhstan, as well as steadily in recent years because of well produc-
rising debt. In a statement on August 6, it said tivity issues and delays to the completion of a
it was in advanced talks with note holders after new gas treatment unit.
failing to pay interest due on its 8.0% senior notes Production averaged only 23,528 boepd in
due 2022 and 7.0% senior notes due 2025. the first half of 2020, down from 2019’s full-year
It is in discussions with financial and legal average of 28,600 boepd. Its revenues plunged
advisors to a steering committee of note hold- 47% to $92.6mn during the period, resulting in
ers, namely PJT Partners UK and Akin Gump a $51.1mn pre-tax loss.
Strauss Hauer & Feld. The talks are aimed at The company had hoped to find new inves-
reaching a forbearance agreement with certain tors but called off this search in January.
note holders on interest payments, and Nos- Nostrum’s net debt is $1.06bn, meaning it
trum intends to invite other holders to join the had a staggering net debt to EBITDA ratio of
agreement. over 27 in the first half. Shares in the company
Nostrum was meant to pay interest due on its were down 0.9% on GBP0.1052 apiece in Lon-
8.0% 2022 notes on July 23 and a 30-day grace don after it announced defaulting on the interest
period has now expired. It has also failed to settle payments. ™
NEWS IN BRIEF

RUSSIA materially affected by the OPEC+ constraints Gazprom board chairman Alexei Miller to
and the COVID-19 crisis. discuss prospects for co-operation in the
Tatneft regional oil major a 2030 strategy, which includes the construction of the pipeline running from
In September 2018 Tatneft approved
Russia to China via Mongolia.
shows stable 2Q20 construction of a RUB70.6bn ($1bn) gas Prime Minister Sodbaatar Yangu and Miller
During the meeting, Mongolian Deputy
chemical complex by 2024, boosting oil
Russian Tatarstan-based regional oil major output to 38.4mn tonnes by 2030, and signed a memorandum of understanding
Tatneft reported 2Q20 IFRS results with spending RUB799bn in capex on extraction (MoU) on the establishment of a special-
revenues of $1.9bn, Ebitda of $0.5bn and net and RUB194bn on refining from 2019 to purpose company for the project. The
income of $0.2mn, beating the consensus 2030. As a result, Tatneft anticipated its company will operate in Mongolia and
expectations on earnings and bottom line by market capitalisation to rise to $36bn by develop the feasibility study.
9% and 6% respectively. 2030. The project will involve Gazprom, CNPC
As reported by bne IntelliNews, Tatneft from China and Erdenes Mongol from
was the first Russian oil major to cancel the Mongolia. A confidentiality agreement will
dividends for 4Q19 due to the coronavirus Gazprom and Mongolia be signed by Gazprom and Erdenes Mongol
(COVID-19) crisis, prompting fears of next week.
across-the-board lower payouts in the agree to set up JV for gas In March, Russian President Vladimir
Russian oil and gas equity universe. But Putin gave Gazprom permission to start
since then, the company has confirmed the transmission to China designing the Siberian Power-2 project. With
dividends. the pipeline, Mongolia could earn $1bn a
Given the highly volatile and tough nature project year by transiting 50bn cubic metres of gas
of the macro environment in the quarter, per year.
BCS Global Markets consider the 2Q20 Russian gas giant Gazprom and Mongolia With the deal, Gazprom "has taken a
results as a neutral event for Tatneft. have signed a memorandum to establish a small but necessary step along the way
The analysts reiterated a Buy call on the joint venture to develop a technical feasibility to eventually bringing West Siberian gas
name with target prices of $15 for ordinary study for the construction and use of a trunk to China," BCS Global Markets analysts
and $14 for preferred shares, and suggest pipeline for natural gas supplies to China, commented on August 26, seeing the news as
a focus on near-term CapEx expectations, Gazprom said on August 25. slightly positive for the Russian gas giant.
especially for 2H20, and whether any of Prime Minister of Mongolia Khurelsukh Earlier this year Gazprom CEO Alexei
the company’s medium-term growth plans Ukhnaa along with Mongolian agencies Miller signalled that Mongolia was now on
outlined in the 2030 strategy have been took part in an online meeting with the the table as a transit country for the Western

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