Page 12 - FSUOGM Week 35 2021

FSUOGM NEWS IN BRIEF FSUOGM

RUSSIA side develop a better understanding of updated guidance on capital spending plans
the country and its risk level. Establishing for 2021.
Gas prices top $600 per local connections will also help Russian cash flow was negatively affected by working
Sova Capital commented that operating
companies gain access to Nigeria’s large
thousand cubic metres markets, he said. capital (about RUB99.8bn) to a much larger
The meeting between Ramanovsky
extent than expected, dragging down FCF
Short-term futures for gas prices on the and Shehu built on a previous agreement by 31% q/q, though it was up 4.4-fold y/y to
Dutch TTF spot index for ICE Futures for between Lukoil and Nigerian National RUB112bn.
October continued to rise on August 30, Petroleum Corp. (NNPC), the national Adjusting FCF for dividend calculation
climbing to €49.26 per kWh, or $600 per oil company (NOC) of Nigeria. The two purposes, Sova estimates Lukoil’s 1H21
thousand cubic metres, according to the companies signed the agreement in 2019, dividend per share (DPS) at RUB 340/share,
exchange’s data as reported by the Kyiv Post. pledging to work together on several new implying a 5% yield.
Trading on August 27 finished up at the projects, including gas-to-power (GTP) "While revenue and net income were
value of $586 per thousand cubic metres – initiatives and the rehabilitation of the ahead of our and consensus forecasts, the
about triple the level for the same period a Warri oil refinery. dividend came in lower than expected due to
year earlier. Lukoil is already active in Nigeria the impact from working capital," Sova notes.
The new gas year begins in October. through its operatorship of OML 140, an The analysts now see the full-year dividend
Gazprom has a long-term reservation of ultra-deepwater block that lies about 145 estimate of RUB847/share implying a 2H21
transit capacities through the Yamal-Europe km from the coast in the Gulf of Guinea. dividend of RUB509/share, which "might be a
gas pipeline until the end of September. The This licence area encompasses the Ofigbo, tall task for the company."
Russian company did not book capacities Nsiko and Nsiko North discoveries, as well "Overall, we do not expect a strong
of the pipeline at past annual and quarterly as a portion of a unitised field known as market reaction to the results, but we think
auctions. Bonga Southwest Aparo. some might be slightly disappointed by the
The launch of the almost completed The Russian company joined the project interim dividend," Sova analysts believe,
Nord Stream 2 gas pipeline is anticipated in 2014, after buying a 45% stake in the while maintaining a Buy call on Lukoil's
in September and that may bring prices block from a subsidiary of Chevron (US). shares.
down. Issues concerning the regulation Chevron has retained a 55% equity stake
of the pipeline’s operation are currently in OML 140, while NNPC and another EASTERN EUROPE
under consideration by the EU that may Nigerian company are carried partners.
rule Russia’s Gazprom cannot both own the Maintaining gas flow
pipeline and use it.
Gas prices have been driven up by a Lukoil beats expectations through Ukraine can deter
combination of high demand and technical
outages in transport over the summer due with $2.6bn profit in 2Q21 energy blackmail
to maintenance and an accident.
Russia's second-largest oil producer Ukrainian state energy giant Naftogaz is
independent Lukoil posted $30bn in determined to keep gas flowing through
Lukoil interested in revenues, $4.6bn EBITDA and $2.6bn Ukrainian pipelines as a bulwark against
net profit for 2Q21, with the top line and
potential Russian energy blackmail.
expanding Nigerian earnings beating consensus expectations by Naftogaz is ready to prolong the current
agreement with Gazprom after its expiry in
5% and the bottom line by 9%.
footprint results on strong downstream performance, 2024, its CEO Yuriy Vitrenko stated during
Previously in 1Q21 Lukoil posted strong
a press briefing on 22 August following the
Lukoil, Russia’s largest privately owned while suggesting possible changes to its visit of German Chancellor Angela Merkel
oil company, has expressed interest in dividend policy. to Ukraine. While attempts to block the
expanding its operations in Nigeria. In the reporting quarter, out of the pipeline’s construction and launch have
Ivan Ramanovsky, the Russian operator’s $0.4bn quarter-on-quarter increase in repeatedly failed, the Naftogaz CEO is
vice-president for West Africa, Europe and EBITDA, the largest contributor was the possibly buoyed by news of a recent setback
America, said last week during a meeting Russian downstream segment, which to Gazprom, following a German court’s
with Abdullahi Shehu, Nigeria’s ambassador accounted for $0.3bn, or 71% of the rise, ruling that Nord Stream 2 would not be
to Moscow, that Lukoil had the financial BCS Global Markets commented. The exempt from EU gas market rules, possibly
capacity to support additional projects second-largest contributor was E&P limiting the pipeline’s capacity.
in Nigeria. The company is interested in (exploration and production) Russia, with “The primary danger Nord Stream
establishing partnerships with Nigerian $0.1bn, or 26% of the increase. 2 poses is the threat to stop gas transit
companies, he told Shehu. Free cash flow (FCF) of the company via Ukraine, which would mean a much
Ramanovsky did not say whether Lukoil came in at $1.5bn, 31% below versus an higher risk of full-scale military invasion
was eyeing any particular fields or looking unusually strong Q1, but in line with the of Ukraine by the Russian Federation. We
to co-operate with any specific Nigerian $1.5bn of the previous six quarters. The therefore view the transit issue and the
firm. But he did say that the Russian management has previously indicated that preservation of physical transit volumes
operator was willing to team up with both 1Q21 carried a couple of one-offs in it for through Ukraine as directly tied to the
corporate and individual investors to FCF that would be unlikely to be repeated. security issue," said the Naftogaz CEO.
explore new opportunities. BCS Global Markets maintained a Vitrenko offered guarantees that the
Shehu responded by expressing Buy call on Lukoil's shares and suggested Ukrainian gas transmission system provides
appreciation for Lukoil’s show of interest. focusing on output adjustments in light of reliable and competitive transportation
He also urged Russian oil executives to rising OPEC+ production quotas, details compared to other gas pipelines, including
arrange for visits to Nigeria, saying that on the recently announced plans to add a the Nord Stream 2 gas pipeline.
face-to-face visits would help the Russian cat cracker at Lukoil’s Perm refinery and "On the one hand, we insist that right

P12 www. NEWSBASE .com Week 35 01•September•2021