Page 99 - RusRPTJul19

9.2 Major corporate news 9.2.1 Oil & gas corporate news
● Gazprom
Gazprom’s gas exports were down 6.3% y/y to 87.8bcm in the period 1 January – 15 June, Kommersant reports. However, since the beginning of May gas export volumes have been almost flat y/y, at 23.4bcm, the paper writes. Analysts believe that the strong export gas supplies to Europe over the last couple of months are generally driven by low gas prices (the price at the key European hub TTF is only $132/kcm, 49% lower than a year ago), which prompts coal substitution in power generation, and the ongoing filling of underground gas storages (they are now 67.1% full, or 15.5pp above the five- year average). The latter is likely to be driven by strong time spreads (the December TTF futures contract trades at $223/kcm, or almost 70% higher than the current spot price) and uncertainty over gas supplies starting from January 2020, when the gas transit contract with Ukraine expires. This is because no new transit contract has been signed so far and the launch of the Nord Stream- 2 pipeline might be delayed since the Danish regulatory authorities have not yet given permission for construction. Analysts expect Gazprom to supply 191bcm to Europe (-5% y/y) this year.
Russia's natural gas giant Gazprom reported 24% year-on-year gain in net income under IFRS to $8bn in 1Q19, despite revenues and Ebitda declining by 8% y/y and 13% y/y, respectively. Nevertheless, Gazprom's Ebitda beat the forecasts of the analysts, mostly due to lower gas purchase costs and a sizable $2.8bn foreign exchange gain, VTB Capital commented on May 31.
Gazprom Neft has set new strategic targets, planning to double its gas output to 60bn cubic meters annually, to optimise its Ebitda per tonne of oil (up by 10% in upstream extraction, double in the downstream refining segment, and doubling in retail segment). The company also plans to boost its technology and safety leadership, expecting the technology gains to help boost the output by 50mn tonnes of hydrocarbons by 2030. Capital investments are expected to grow from RUB380bn in 2019 to over RUB400bn annually in 2021-22 in the company's base case scenario. Another RUB300bn in investments in "additional projects could be made in 2019-23, depending on the macro environment, exploration and how the application of new technology goes," Sberbank CIB added. "The company is yet to present detailed information on new upstream developments, which are to be based mainly in Yamal and Western Siberia. The new strategy is quite ambitious, in our view, targeting value-accretive (ROACE of at least 15%) liquids production growth of circa 3% CAGR to almost 3 mboepd by 2030," Sberbank CIB wrote on June 14.
● Novatek
Russian independent energy company Novatek has announced the first delivery of its liquefied natural gas (LNG) from its Yamal project in the Arctic to Japan. The shipment was unloaded at the Tobata LNG Terminal in accordance with the delivery schedule, Natural Gas World reports. The cargo was carried out in accordance with a long-term agreement with France’s Total,
99 RUSSIA Country Report July 2019 www.intellinews.com