Page 18 - FSUOGM Week 23

FSUOGM NEWS IN BRIEF FSUOGM

RUSSIA depending on the oil price, and is planning (subject to it winning the tender), as it
to postpone some projects until a future might increase LPD capacity utilisation and
Lukoil reiterates focus date. partially offset lower shipments of other
pipes, VTBC believes.
Positive working capital release into
on dividends, buyback in cash flow is possible on existing crude oil second half of 2019 the company, along
As reported by bne IntelliNews, in the
inventories, and inventory revaluation may
question provide a positive impact on Ebitda and with other steel majors, was hit by lower
prices, but also faced competitive challenges
profit if oil continues to grow, BCS GM
Following the publication of its 1Q20 financial believes. domestically. But in 4Q19 TMK beat
IFRS results, Russia’s second-largest oil expectations on its top line and got a $1bn
company, Lukoil, confirmed that the key focus cash boost from finally closing the sale of its
is dividends, not the buyback, and provided no Russian pipemakers could US subsidiary IPSCO Tubulars.
guidance on extending the share buyback in In April shares of TMK rallied on its
2020. be supported by Gazprom’s buyback and delisting from the London
As reported by bne IntelliNews, despite Stock Exchange. Still, the “company’s
a decline in revenues, Lukoil managed to order capitalisation continues to face pressure due
maintain a positive cash flow in a turbulent to various market factors and low liquidity
1Q20. Russian natural gas giant Gazprom has placed of the company’s equity securities,” TMK
The investment case of one of the most a tender to acquire 1.28mn tonnes of large- said in a statement, explaining its decision
valuable Russian oil and gas blue chips in diameter pipes (LDP) for RUB98bn ($1.43bn) to delist in London.
2019 was reinforced by the pledge to pay to be used in the construction of loopings for
at least 100% of cash flow in dividends and the pipeline to China, Power of Siberia, as
by the launch of the second $3bn buyback well as the Bovanenkovo-Ukhta and Ukhta- Russian Urals oil back to
programme. Torzhok pipelines.
The lack of clarity on extending the Gazprom is aiming for deliveries of the break-even $42 mark
buyback is not supportive for share pipelines for 2021-22 and will close the
price performance, BCS Global Markets tender on June 16. Russia’s federal budget is back to the
commented on June 5 following the “The LDP industry is quite volatile and equilibrium threshold as the Urals blend oil
conference call of the management. depends on large infrastructure projects, prices have reached $42 per barrel set in the
Overall, for 2Q20, Lukoil sees more predominantly Gazprom’s and Transneft’s budget rule, RBC business portal reported on
positive outlook on the upstream segment, major trunk pipeline construction,” VTB June 9.
while negative for refining and retail. Capital (VTBC) commented on June 9, Back in April Urals dropped to as
Commenting on the OPEC+ deal pressuring estimating that the tender might account for low as $12, while oil prices even briefly
output, Lukoil claimed that it will be able to almost a third of total LDP consumption in turned negative, amid a global slump in
restore output without significant problems, Russia in 2020-21. demand. Consistently low oil prices would
as soon as the deal permits this. At the same The bank thus sees the order as positive undermine Russia’s fiscal position and risk
time for the company, the cut does not for pipe producers, given the weak demand quickly exhausting the National Welfare
impact high-margin barrels, and their share in other pipe segments due negative Fund (NWF).
in its output will rise. developments from the OPEC+ agreement But as the oil price is again above the $42
Lukoil is also cutting its capital and the coronavirus (COVID-19) set in the budget rule, the NWF might start
investment programme for 2020 from pandemic. to be replenished again through currency
RUB550bn ($8.06bn) to RUB450bn-500bn, This includes the market leader TMK purchases off the market by the Finance

P18 www. NEWSBASE .com Week 23 10•June•2020