Page 98 - RusRPTDec18

9.2 Major corporate news 9.2.1 Oil & gas corporate news
● Gazprom
Russia's natural gas giant Gazprom reported strong 3Q18 results under IFRS, beating the market consensus on earnings and net income. The company's revenues gained 21% year-on-year to $29bn, with Ebitda soaring 68% y/y to $10bn and net income by 74% y/y to $5.9bn (6% and 10% above consensus expectations respectively). Strong sales volumes and prices supported revenues, helped by better than expected operating expenses, which in turn had a positive effect on Ebitda, VTB Capital commented on December 3. The company's export deliveries in the reporting quarter went up by 6% y/y, while domestic sales increased by 2% y/y. In the meantime on November 28 the deputy head of Gazprom Andrei Kruglov told the press that his company could increase dividends already in 2018. Previously the company resisted the government's drive to increase the payout to 50% of net profit, but faced a threat of an additional Mineral Extraction Tax (MET) should it fail to do so.
Russian gas giant Gazprom secretly borrowed €3.5bn abroad in August- October 2018, without publicly announcing the loan deals because of the sanctions environment, Interfax and Vedomosti reported citing financial reports of the company. In August reports claimed that Gazprom suspended its external borrowing plans due to the threat of legal action as part of its legal dispute with Ukraine's Naftogaz. Earlier Gazprom reportedly had to call off a road show for a potential GBP Eurobond issue in the middle of June needed to refinance $15.2bn in external debt by the end of 2018. However, it transpires that Gazprom had secretly negotiated with banks and lenders to raise hundreds of millions of financing. The state-owned gas giant’s financial statements show that in August Gazprom took out a €400mn that matures in 2023, another loan in September of €700mn due by 2025, and two loans of €1.2bn and €1.1bn in October, all from unnamed international banks and syndicates.
Russia's natural gas giant Gazprom is preparing to issue a 5-year euro- denominated Eurobond, unnamed financial market sources told Reuters daily on November 12. Reportedly Gazprombank, JP Morgan and Unicredit will manage and bookrun the issue. Earlier Reuters claimed that Gazprom managed to borrow €3.4bn and RUB58bn ($859mn) from international banks despite previous reports that the company halted international borrowing amid sanction risks and ongoing legal dispute with Ukrainian gas company Naftogaz. Gazprom had to call off a road-show for a potential GBP Eurobond issue in the middle of June needed to refinance $15.2bn in external debt by the end of 2018. Other sources claimed that Gazprom had also had to call off the planned euro and Japanese yen Eurobond planned this autumn. Prior to June Gazprom was able to raise CHF750mn 5-year Eurobond in, which UBS was the only Western bank to participate, with another €750mn in 8-year Eurobond arranged by Deutsche Bank, JPMorgan, and along with three Russian banks.
Russia's oil majors Gazprom Neft and Surgutneftegaz (Surgut) are holding "intense negotiations" with their buyers on 2019 contracts, trying to shield as much as possible from sanction risks, Reuters reported on November 8 citing unnamed industry sources. Previous reports already indicated that Surgut tried to foresee an opportunity to switch to euro payments and reportedly now wants the buyers to assume responsibility for any sanction- related risks. Also Gazprom Neft reportedly asks the buyers to include more in terms of possible currency payments, and wants to hang additional fees on buyers in case payments are delayed due to sanctions.
● Rosneft
98 RUSSIA Country Report December 2018 www.intellinews.com