Page 101 - RusRPTDec18

Western sanctions against its shareholder stoligarch Gennady Timchenko. In January-September 2018 Yamal already produced 5mn tonnes of LNG on short- and long-term deals and 0.47mn tonnes of gas condensate. By the end of the year Novatek plans to secure shareholders for the next LNG project Arctic-2. Recent reports suggested that Saudi Aramco could become its second-largest shareholder after the Russian company. Total also said it will acquire a 10% stake in Arctic-2 and recently upped its stake in Novatek overall to 19.4%. Novatek plans to boost LNG output to 56mn tonnes by 2030 from about 20mn tonnes planned for Yamal and Arctic-2 by 2023, according to the CEO of Total Patrick Pouyanné. This would make more that half of planned quadrupling of Russian LNG output to 83mn tonnes, as recently estimated by the Ministry of Energy.
Russia's second-largest natural gas producer and global liquefied natural gas runner-up Novatek on November 22 announced the completion of the third line of its Yamal LNG project one year ahead of schedule and reaching the full capacity of 16.5mn tonnes annually. Adopting and successfully implementing ambitious Liquefied Natural Gas (LNG) strategy that started with Yamal in 2013 has pushed Novatek to recently becoming one of top five of Russia's most valuable companies. With the help of French energy major Total and a consortium of other international energy majors Novatek launched its first major LNG project Yamal in 2017 despite Western sanctions against its shareholder stoligarch Gennady Timchenko. In January-September 2018 Yamal already produced 5mn tonnes of LNG on short- and long-term deals and 0.47mn tonnes of gas condensate. By the end of the year Novatek plans to secure shareholders for the next LNG project Arctic-2. Recent reports suggested that Saudi Aramco could become its second-largest shareholder after the Russian company. Total also said it will acquire a 10% stake in Arctic- 2 and recently upped its stake in Novatek overall to 19.4%. Novatek plans to boost LNG output to 56mn tonnes by 2030 from about 20mn tonnes planned for Yamal and Arctic-2 by 2023, according to the CEO of Total Patrick Pouyanné. This would make more that half of planned quadrupling of Russian LNG output to 83mn tonnes, as recently estimated by the Ministry of Energy.
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One of Russia's largest oil companies Surgutneftegas (Surgut) reported net profit of RUB226bn ($3.5bn) for the third quarter of 2018 under Russian Accounting Standards (RAS). The company's cash pile expanded by 2.2% quarter-on-quarter to RUB2.72 trillion ($41.5bn) as of end of the quarter. Revenues were up 8% q/q at RUB 430bn ($6.56bn) in the third quarter. Net income declined by 27% q/q due to the high base effect of 2Q18, VTB Capital commented on November 2 noting that the bottom line still came in line with the forecast. "Based on these results, ...the dividend payment for prefs might reach RUB6.90/share for 2018, with a dividend yield of 18.1%, if Surgutneftegas sticks to its dividend policy (implied 7.1% of RAS net income for preferred shares) and under RUB closing at 66.70 [to US dollar] by the year-end," VTB estimated seeing the results as supportive for the name.
Transneft published its 3Q18 IFRS results, which came in line with forecasts on revenues and EBITDA, but net income was reported more than 60% higher than we had expected, primarily due to the RUB 25.4bn revaluation gain. Nevertheless, we do not expect this to have any significant effect on future dividends, which are based on normalised net income adjusted for non-cash one offs. We calculate that Transneft might pay a dividend of RUB 9,587/share under a 50% payout ratio, which would be a 5.6% DY at the
101 RUSSIA Country Report December 2018 www.intellinews.com