Page 154 - RusRPTApr21

Rosneft ecological investment at refineries to total $1.8bn by 2024. Rosneft will invest Rb136bn into environmental projects in refining by 2024. Interfax reported. The program will include air protection, industrial waste management, protection of surface and ground water, among other things. A continued focus on ESG. The plan follows on an observable increase in the company’s focus on ESG-related issues over the last year. As such, despite the large price tag, it is likely to be treated positively by the market. Rosneft continues to raise its effort in ESG issues and has now announced a c$1.8bn, 3-year program to improve the environmental footprint at its Russian refineries.
Rosneft to sell three subsidiaries in the south of Russia to Cen Geo. According to Refinitiv, Rosneft is to sell three upstream subsidiaries in the south of Russia (Stavropolneftegas, Ingushneft and Dagneft) to Cen Geo, a private company. The sale of 51% of Ingushneft’s shares has reportedly been completed, while the sales of two other companies are expected to close by May. The sale might be part of Rosneft’s plan to divest fields with low profitability. This report follows the announcement about company selling tail assets (such as Varyeganneftegas, North-Varyeganskoye and NNP) to NNK in January. Production at Stavropolneftegas, Ingushneft and Dagneft amounted to 0.7mnt, 0.05mnt and 0.1mnt, respectively, in 2020, or less than 0.5% of Rosneft’s standalone Russian production in total. Stavropolneftegas’ 2P reserves were 254mn boe at the end of 2018, while Dagneft’s were 5.5mn boe at the end of 2019. The three companies supply oil to the CPC pipeline, where it is mixed with gas condensate and exported. Of the three companies, Stavropolneftegas is the largest and by far the most valuable asset. The mature reserve base is overcompensated by tax breaks and its proximity to the international markets. The use of the CPC pipeline allows it to preserve the premium for the quality of crude. Overall, given that the deal price has not been announced, we deem this news as not market-moving for Rosneft in the short term.
● Novatek
Novatek signed a firm LNG delivery contract with Repsol in 2020, Kommersant reports, with 1mnt/a of LNG to be delivered from Arctic LNG 2 over 15 years. The contract envisages a DES delivery basis, and the price is linked to both Brent and TTF. Back in 2019, Novatek reported signing non- binding supply agreements with Vitol and Repsol, for 1mnt/a of LNG for 15 years each (see our Morning Comment of 10 April 2019). According to Kommersant, the firm contract with Repsol follows the non-binding one in all aspects. Therefore, we treat the news as not marketmoving. We expect more newsflow on Arctic LNG 2’s LNG contracts in the near future.
● Lukoil
Lukoil held a conference call after publishing its 4Q20 IFRS results on March 10. Overall, the management's guidance was in line with expectations. Here are the key highlights:
154 RUSSIA Country Report April 2021 www.intellinews.com