Page 20 - FSUOGM Week 44

FSUOGM NEWS IN BRIEF FSUOGM

RUSSIA now producing 17mn tonnes per year (tpy) EASTERN EUROPE
of super-cooled gas. .
Novatek posts 24% drop in Ukraine starts heating

revenues in Q3 2020 Russian PM asks ministries season with record

Russia's second-largest natural gas and leading to mull tax incentives for amounts of gas in storage
LNG producer Novatek reported a 24%
year-on-year decline in revenues in 3Q20 Arctic exploration The heating season officially starts in Ukraine
under IFRS to $2.2bn, missing consensus this week with record amounts of gas in
expectations by 2%. Prime Minister Mikhail Mishustin has storage, Ukraine’s natural gas company
As reported by bne IntelliNews, Novatek ordered the government to work out Naftogaz reports.
posted a 4.5% y/y increase in gas output in tax stimulation initiatives for geological Natural gas reserves are at a record 28.4bn
3Q20, and overall hydrocarbon production exploration in the Arctic zone, the cubic metres, almost a third (30%) above
growth of 3.6% y/y. government said in a statement on November the level at the same this time last year,
But the company's Ebitda was down by 2. which was also a record high, according to
89% y/y (a gain of 110% quarter on quarter), The Natural Resources and Environment Naftogaz, as cited by UBN.
while still meeting the expectations. Net Ministry, the Far East Development Ministry, With a total storage capacity of 31mn
income of $179mn (down by 97% y/y and the Finance Ministry, the Economic bcm, Ukraine’s underground reservoirs are
69% q/q) missed the consensus expectations Development Ministry, and the Energy 92% full, also a record. In the seven months
by 19%. Ministry should prepare the proposals until since Naftogaz started storing gas last spring,
In 3Q20 the company's free cash flow December 18. the state company has increased stocks by
posted a positive $100mn versus $800mn in 80%.
2Q20, as capital expenditure was cut by 43% Last year’s warm winter and doubt over a
to $500mn. Net debt dropped from $1.5bn as Fire breaks out at Lukoil new transit deal with Russia led to Ukraine
of the end of 2Q20 to a negative $0.2bn as of building up record amounts of gas in storage.
the end of the reporting quarter. oilfield in Komi A deal was eventually signed with Russia
"As usual in times of a volatile ruble at the last minute, but for reduced transit
exchange rate, Novatek’s net income line was A fire broke out at an oil mine of Yareganeft, volumes.
affected by forex gains and losses in its core a subsidiary of oil major Lukoil in the Komi Home to much of the Soviet-era gas
and joint venture operations," BCS Global Republic, and two workers are still missing, storage facilities, Naftogaz has tried to
Markets commented on October 28. the local branch of the Emergency Ministry capitalise on gas storage as a business with
While the results coming in below said on November 1. some success. Europe’s gas glut this summer
the consensus is seen as negative for the “At 20:03 on November 1 2020 … the resulted in 79 EU traders using Ukraine’s
company, BCS GM still maintained a Buy Pechora paramilitary mountain rescue squad new duty-free warehouse regime to store gas
recommendation on Novatek shares, arguing on duty … reported a fire that broke out at in 12 underground reservoirs. Gas stored in
that "significant forex and commodity the third incline block of the first oil mine of this customs regime hit 11 bcm this autumn,
volatility continuing in the 3rd quarter" Yareganeft,” the ministry said in a statement, triple the level of 2017. With the five largest
will have the analysts "digging for a while adding that there were 82 workers present at reservoirs within 160 km of Hungary,
to understand how the company actually the emergency site. Ukraine has supplied the latter with a record
performed versus expectations." The representative told reporters that 80 9 bcm this year.
BCS GM suggests focusing on people were brought back to the surface. “Thanks to market reform, Ukraine
comments regarding the current LNG The Investigative Committee launched became Europe’s indisputable storage hub
market environment – which appears to be an inspection. “Given the preliminary in 2020 as markets were facing suppressed
recovering quickly from summer lows and information at our disposal, the cause of demand linked to the pandemic and
how that may affect development plans for the fire was a short circuit in a launching an underlying supply overhang,” writes
the several new LNG projects Novatek has on mechanism used by workers of subcontractor Aura Sabadus, a senior energy journalist
the drawing board. Neftegazmash during drilling works,” the for London’s Independent Commodity
Another focus is on the progress update committee said. Intelligence Services, or ICIS, as cited by
on Novatek's Arctic LNG-2 project and the Workers of Neftegazmash tried to put UBN.
Train-4 at the flagship Yamal LNG project. out the fire on their own at first, but failed
Novatek is securing the financing for and had to notify customer Yareganeft. The
Arctic LNG-2, its second liquefaction project management of the oil mine decided to
to launch production. Its first, Yamal LNG, evacuate all workers, the committee said.
went on stream in December 2017 and is

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