Page 140 - RusRPTNov21

price stands at above $300/kcm.
· YE21 net debt to EBITDA is expected at 1.2x.
· FCF is likely to remain positive, even after deducting dividends for
2021 from it.
The increase in the investment programme had already been approved by the Management Committee, so this was fully expected. In our model, we account for RUB1.8tn of Group capex (the guidance for it was at $1.5bn before the increase in the investment programme), so the higher gas business capex is in line with our forecasts. In our model, we expect EBITDA in excess of $45bn under $270-300/kcm, so our expectations broadly match management’s.
Moldova’s representatives are to hold negotiations with Gazprom on concluding a new gas supply contract, Kommersant reports. The previous one expired on 30 September. The contract was temporarily renewed for one month, so that Moldova is receiving 65% of the necessary gas (144mmcm overall) in October at $790/kcm (vs. $550/kcm in September). According to the paper, Moldova asked for delivery of 250mcm in October, but this request was not completed in full as insufficient transit capacity was booked in advance. Reportedly, Gazprom and Moldova are discussing a one-year contract for 3bcm. Simultaneously, Moldova is to discuss potential purchases of gas with Romania, Ukraine and other parties, according to Interfax.
Gazprom held a webinar to discuss the European gas market on October 8. The key takeaways are as follows:
The company said current spot (day-ahead) gas prices of above $1,000/mcm are elevated and unsustainable. It said the market is being driven by speculation amid low gas storage volumes and that weather conditions this heating season will be crucial for the short-term pricing outlook.
In Europe, gas demand rose 14% y/y to 316 bcm in 1H21 from a low base last year.
Global LNG supplies rose by 22 bcm y/y in 9m21. Asia (mainly China) increased LNG purchases by 26 bcm, Europe cut its LNG purchases by 17.4 bcm and other regions increased LNG consumption by 13.4 bcm. The largest decreases in LNG supplies to Europe were attributable to Qatar (-9.4 bcm) and Norway (-4.1 bcm), while supplies from other regions (including the US) dropped by 3.9 bcm.
In addition to the lower LNG supplies, the European market tightness also came about due to a 2 pp decrease (from 24% to 22%) in the share of renewables in the power generation balance in 8m21.
Gazprom estimates that Europe needs to inject less than 14 bcm of natural gas (less than 2.5% of annual consumption) into storage to reach the average level for this time of year and normalize the situation.
Gazprom's maximum production capacity stands at 1.5 bcmpd (547.5
140 RUSSIA Country Report November 2021 www.intellinews.com