Page 88 - RusRPTFeb20

production in Bangladesh, Kommersant reports. The agreement with Petrobangla includes clauses on strategic cooperation in exploration, production and transportation, while BAPEX might cooperate with Gazprom in exploration on Bhola island and could create a joint venture to develop the reserves after the project progresses from the exploration stage. According to Kommersant, this increased presence in Bangladesh might allow Gazprom to start gas deliveries to India, as well as lay the groundwork for future deliveries of LNG to the region.
● Novatek
Russian LNG runner-up ​Novatek​ increased natural gas output by 8.6% in 2019 to 74.7bn cubic metres of gas​, maintaining its status as the second-largest gas producer in Russia, behind Gazprom and ahead oil major Rosneft. As reported by ​bne IntelliNews,​ Novatek has set its sights on producing as much as 70mn tonnes per year (tpy) of LNG by 2030, underpinning Russia’s ambition to become a top-tier global LNG supplier. It has acquired a number of new gas fields in recent years on Gydan and the Yamal peninsula to build up a resource base to support its new projects. Novatek has successfully launched Yamal LNG plant and is preparing its Arctic-2 LNG plant. LNG sales in 2019 increased to 12.8 bcm, with LNG sold exclusively abroad. Overall sales in 2018 grew by 8.8% to 78.5 bcm, with sales in Russia down by 0.6% to 65.65 bcm. In the meantime, the volumes of refined gas condensate from the Purovsk and Ust-Luga facilities of Novatek declined by 2% and 0.7% respectively to 10.8mn and 6.9mn tonnes.
● Lukoil
Lukoil’s meeting with Putin reveals CapEx and exploration plans. ​The possible exploration of new offshore blocks may be helpful after 2024, while highlights from the CEO indicate possible upside risk to CapEx estimates and downside risk to DY expectations, but nothing significant. The CEO requests offshore blocks, reveals 10y CapEx plan during meet with Putin. During his meeting with President Putin, Lukoil CEO Alekperov, asked for three additional unexplored offshore blocks in the Caspian Sea in order to expand its resource base in Russia – Interfax and Kommersant. The company already produces c7m tons of oil annually at two fields in the Caspian. In addition, Alekperov mentioned that the company is preparing a new strategy with more than $100bn investments over 10 years. Lukoil has a long lasting strategy in the Caspian sea, aimed at maintaining output volumes at its current offshore fields, therefore new blocks could provide a visible impact for Lukoil’s production after 2024 – the news looks neutral for mid-term valuation. Separately, the strategy implies CapEx of $10bn pa. However, the guided number likely includes VAT and Iraq projects’ CapEx (West Qurna2), while the news does not seem to threaten FCF and DY. As such, forecasted DY for 2020-24 still remains in the double-digits.
● Other
Russian state oil pipeline operator ​Transneft​ could be forced to pay out double the expected amount of compensations ​for supplies of contaminated oil, Reuters reported on January 30 citing unnamed industry sources claiming that compensations could reach up to $1bn. As reported by bne IntelliNews​, in 2019 Transneft was embarrassed by the scandal of contaminated oil in the Druzhba pipeline and Ust Luga port​. Its ​dividend
88​ RUSSIA Country Report​ February 2020 ​ ​www.intellinews.com