Page 136 - RusRPTDec21

official European export price is below company’s estimate ($270/kcm in our model vs above USD 300/kcm as per company).
The Polish gas monopoly PGNiG has sent an application to Gazprom for a review of pricing under the current contract due to the unprecedented growth of spot gas prices in Europe, according to Vedomosti. Gazprom commented that the company was currently studying the appeal of PGNiG.
The contract between PGNiG and Gazprom envisages annual supplies of up to 9.8bcm, with 8.7bcm being the minimum takeoff volume. The contract expires in 2022 and PGNiG has previously stated that it does not intend to renew the contract.
Negotiations are to take time and the price revision (if any) is unlikely to be material for Gazprom’s financials, we believe. We therefore consider the news as neutral for the stock.
Earlier, the company had already approached Gazprom with a desire to change the pricing conditions. In 2015, PGNiG filed a lawsuit with the Stockholm Arbitration with a requirement to oblige Gazprom to revise the pricing under the contract. The arbitration ruled that Gazprom should pay the Polish company USD 1.5bn and Gazprom Export fulfilled this decision in the summer of 2020 (see our Morning Comment of 2 July 2020). As a result, the contract terms were revised with the share of spot gas component increased tangibly, while oil-linking decreased.
Gazprom Neft announces its consolidated IFRS financial statements for the nine months (9M) and third quarter (3Q) ended 30 September 2021 on November 16.
In 9M 2021, revenue amounted to ₽2.162 trillion (an increase of 49.1% year-on-year), with adjusted EBITDA[1] (earnings before interest, taxes, depreciation, and amortisation) up 112.8% to ₽700.6bn. This was driven by increased production and refining volumes, as well as a more positive price environment for oil and petroleum products. Net profit attributable to Gazprom Neft PJSC shareholders increased 10 times and reached ₽357bn in 9M 2021.
In 3Q 2021, Gazprom Neft achieved its lowest leverage in 12 years, with a net debt to EBITDA ratio of 0.32x. A two-fold increase in operating cash flow, supported by the phased realisation of the company’s investment programme, also resulted in sizeablefree cash flow of₽384.4bn in 9M 2021.
Hydrocarbon production, including Gazprom Neft’s share in joint ventures, increased 2.7% in 9M 2021, reaching 74.1mn tonnes of oil equivalent (mtoe). The growth was driven by an increase in production at new projects, the commissioning of the Tazovskoye field in June 2021, as well as the launchof an integrated gas treatment complex at the Vostochno-Messoyakhskoye field in July 2020.
Refining volumes at Gazprom Neft’s own and joint-venture refining
136 RUSSIA Country Report December 2021 www.intellinews.com