Page 125 - RusRPTApr21

The company sees potential to increase its gas exports to China given the possible increase in the country's gas demand and its need to diversify supplies. Negotiations on a potential new contract with China and a new pipeline project are in progress.
Capex guidance for 2021 remained unchanged at RUB1.5 trillion.
Net debt/EBITDA is expected to fall below 2.0 by the end of 2021, while the long-term target is 1.0-2.0.
The company highlighted that the key advantages of Nord Stream-2 versus existing routes lie in transport costs and operational efficiency. The pipeline also has a lower environmental impact due to its superior technology. Meanwhile, the company has enough transport capacity on existing routes to cover its export needs.
Gazprom maintains a strong focus on ESG issues. It continually monitors legislation and has been working to improve its metrics, particularly on the environmental front. The management is also discussing options for hydrogen production.
Russia aims for 20% of global LNG market by 2035. PM Mishustin signed Russia’s new LNG Strategy yesterday. Interfax reported. The new strategy calls for Russia to expand output of LNG to as much as 140mtpa by 2035 from c30mt in 2020. This could give Russia c20% of global LNG demand, which is expected to almost double to c700mtpa by that time (Neft i Kapital), and would require the country to take almost 1/3 of new demand over this time period.
Novatek already plans to boost its own gross output of LNG from c18mt in 2020 to 70mtpa as soon as 2030, or half of Russia’s projected growth by 2035. Other projects include Gazprom’s c10mtpa Baltic LNG project, which is targeted for completion in 2024-25, as well as a 3rd train at Gazprom’s Sakhalin-2 project and smaller trains on the Black Sea coast and at Vladivostok.
LNG will not interfere with Gazprom’s pipeline franchise ... per the plan. Interestingly, the plan directs the new LNG clusters to be developed in such a way as to not compete with Gazprom’s pipeline gas export franchise. In our opinion, this is a politically-required statement that will have little bearing on reality: The influence of this amount of LNG into the global market cannot be ring-fenced from the European gas market. However, as long as development is steady, rather than coming in surges, the effect can be limited.
Lukoil and Novatek will seek new investment agreements with MinEnergo. The agreements will cover RUB150bn (c$2bn) of downstream investments. Vedomosti reported. A second dip for Lukoil, and now Novatek. Only last week it was announced that Lukoil had signed an agreement allowing
125 RUSSIA Country Report April 2021 www.intellinews.com