Page 118 - RusRPTNov22

the short-term risk around Rosneft’s own dividends fell appreciably. We now think the most likely outcome is for Rosneft to fully adhere to its own 50% minimum payout policy on 2022e results.
Logistical effects of the EU’s announced oil and refined product embargoes will likely begin to be felt from Dec. 5. Rosneft was affected more than its peers by the initial interruptions in oil and product exports after the start of the Ukraine crisis. Although operations have since normalized, as a state-owned company Rosneft could again find itself more exposed to any logistical interruptions than its peers.
● Novatek
Novatek will neither release 3Q22 IFRS results nor hold a quarterly call,
per a company press release published yesterday. This extends the company’s practice since the start of the Ukraine crisis at the end of February, and will almost certainly be followed by similar announcements from the rest of the sector.
Not surprising, but lack of data becoming an issue for the whole market. We consider this news as to be both unsurprising and a small negative, but not just for Novatek’s stock, but for all the stocks we cover in the Russian oil & gas sector.
In the current geopolitical environment, the suspension of IFRS data releases by all Russian oil & gas companies was, of course, understandable. However, the lack of timely and accurate accounting data is slowly becoming a more acute problem for equity and debt markets.
As time passes, the lack of accurate data on financial performance increases the chance that investors’ understanding of the financial health of Russia’s publicly-traded oil & gas companies will diverge from reality.
Note this is not an issue for Novatek shareholders alone – the company is traditionally the first to publish accounting results after the end of the quarter, and thus is the first to announce each quarter that it is extending the blackout period – but for the entire sector and, indeed, for practically the entire Russian equity market.
The Arctic LNG-2 project has received key equipment for all 3 of Novatek’s trains, per a quote from Novatek CEO Leonid Mikhelson (Interfax). He acknowledged that sanctions have “of course” influenced the project, and the company has about a 3-year window to localize some equipment purchases for the project, which will “probably require” some additional investment.
Arctic LNG-2 likely to be launched, but we still expect some delays. The
118 RUSSIA Country Report November 2022 www.intellinews.com