Page 7 - FSUOGM Week 30 2019

FSUOGM COMMENTARY FSUOGM
a week to $71.4bn. e company is currently val- ued at $79.4bn.
ere have also been key personnel changes, with three in uential board members in charge of nance and domestic and overseas gas sales being replaced. And rumours are afoot that Alexei Miller, Gazprom’s chief executive since 2001, is next in line for removal.
Meanwhile, Gazprom’s costly pipeline ven- tures are now past their peak in terms of capital requirements. All three are tentatively scheduled to start up by the end of this year, although Gaz- prom has admitted that Nord Stream 2’s launch may slip into 2020. Russian media reports indicate that upstream projects designed to provide gas for these schemes are also nearing completion.
Limitations
While these are positive developments, Gaz- prom has made little progress in other areas.
Reports emerged earlier this year that the company was intending to create a single in-house contractor to buy the construction assets of Rotenburg and Timchenko. But Miller denied any talks were underway earlier this year.
Meanwhile, Gazprom’s dispute with Na ogaz continues to weigh down on its prospects. e company is still ghting the Stockholm ruling in court, and Na ogaz has retaliated by seeking the arrest of its assets across Europe. Earlier this month a UK tribunal ruled to block the Russian
company from collecting lucrative dividends from the existing Nord Stream pipeline.
ere is also uncertainty about Gazprom’s gas transit via Ukraine post-2019. Russia is yet to x a date for further trilateral talks with Ukraine and the European Commission on forming a new contract for Ukrainian gas transit, prompt- ing accusations from Kyiv that Moscow is seek- ing to run down the clock until Nord Stream 2’s launch. e pipeline would allow Gazprom to reduce its ows via Ukraine signi cantly.
And while Gazprom’s ambitious export pro- jects are nearing their nish, it may not be too long before the company rolls out other high- capex ventures to replace them. It recently took a nal investment decision (FID) on a RUB700bn ($11bn) integrated gas processing and LNG complex on the Baltic coast. Royal Dutch Shell had been involved in the project, but repeatedly delayed nal approval before pulling out alto- gether earlier this year, raising concerns about its feasibility.
What next?
e timing of the stock sale could indicate that Gazprom does not anticipate any further signif- icant improvement in its share price and is look- ing to lock in gains while it can. Gazprom is likely to use proceeds to pay o some of its debt, with BCS Global Market estimating that the $2.3bn raised would be enough to cover 6% of its cur- rent net debt. ™
PIPELINES & TRANSPORT
Gazprom seeks to block EU gas law
RUSSIA
Russia views the legislation as discriminatory.
RUSSIA’S Gazprom has called on the EU Court of Justice to revoke “discriminatory measures” applied by the bloc to its controversial Nord Stream 2 pipeline project.
e Nord Stream 2 operating company – a wholly owned subsidiary of Gazprom – reported on July 26 that it had led a request with the court to annual an amendment to the EU’s gas directive passed earlier this year. is amend- ment requires pipelines between EU member states and third countries to comply with Brus- sels’ rules on third-party access, ownership unbundling, non-discriminatory tariffs and transparency.
ough universally applied, the amendment’s introduction was widely seen as an attack on Nord Stream 2, which aims to deliver up to 55bn cubic metres of Russia gas to northern Europe starting next year.
“We as a prudent investor are committed to protecting our investments. But the amend- ment to the gas directive is not only harmful
to Nord Stream 2,” the project operator’s CEO Matthias Warnig said in a statement. “Such obvious discrimination against an individual commercial investment also undermines the ability of the EU’s internal market to attract investments for making the energy transition a reality.”
e amendment is not an issue for pipelines that have already been completed. While con- struction of Nord Stream 2 is still underway (66.3% of the pipe was installed as of July 16), Russia claims it should be treated as nished as the new legislation was imposed a er a nal investment decision (FID) on the project was taken.
Another threat to Nord Stream 2 has come from Denmark, where regulators are yet to issue a permit allowing its construction through Danish waters. Meanwhile, US politicians are considering new sanctions that would penal- ise pipelayers, nanciers and other companies involved in its development.™
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