MIL OSI Translation. Region: Russia –
Source: Gazprom in Russian
Релиз11 February 2020, 18:50
In 2019 secured a stable production and financial results.Will continue to strengthen position in target markets.The focus is on improving economic efficiency.
Today, the fifteenth annual Investor Day of Gazprom began work in New York. The event is attended by Deputy Chairman of the Gazprom Management Committee Famil Sadigov, Deputy Chairman of the Management Committee, General Director of Gazprom Export, Elena Burmistrova, Head of the Department Kiril Polous, representatives of profile divisions and subsidiaries of the company. They meet with investors and analysts of international investment funds and credit organizations from the USA, Great Britain, Russia, countries of the continents Gazprom, representatives of Gazprom spoke about the main results of the company’s work in 2019 in key areas of activity, assessed trends in the target sales markets, announced plans for further development. Kirill Polous’s speech was dedicated to Gazprom’s strategy “. He presented the company’s development goals for the next decade. It was noted that in the long term, the company will provide stable growth in gas production through the development of fields in new gas production centers – on the Yamal Peninsula and in the east of Russia. With the implementation of new mining projects, the commissioning of transport capacities will be synchronized. The launch of large gas processing facilities in the Amur and Leningrad Regions will diversify revenue sources and ensure the monetization of multicomponent gas reserves. Gazprom’s priorities in the domestic market are to ensure reliable gas supply to consumers and the development of gasification. In the main export market – in Europe – the company intends to strengthen its leading position through the use of flexible market mechanisms and increased supplies of high-tech gas pipelines, the operation of which is characterized by a minimum carbon footprint. An additional reduction in the carbon footprint of supplies will be provided in the future through the use of methane-hydrogen fuel. Increasing volumes of Russian pipeline gas exports to China will allow Gazprom to diversify its product sales directions, and commissioning new facilities for liquefying natural gas will expand access to remote gas markets. Elena Burmistrova spoke about the prospects and benefits of the company in a dynamically changing gas market. Gazprom closely monitors the development of the situation and takes the necessary measures to level the influence of a number of negative factors for suppliers. The commissioning of the large-scale pipeline projects Power of Siberia and Turkish Stream serves to further strengthen Gazprom’s position as the world’s largest supplier of natural gas, the most environmentally friendly fossil energy source. In Europe, Gazprom remains the leading exporter. Despite the weather factor and the growth of LNG supplies to European countries, by the end of 2019, Gazprom’s pipeline exports to non-CIS countries (including China) remained close to the record level and amounted to 199.3 billion cubic meters. m. The share of Gazprom’s deliveries in the consumption of Europe and Turkey, according to preliminary data, is 35.6%. Elena Burmistrova spoke about the tools with which the company responds to new challenges and trends in the global gas market. Among them is the development of the electronic trading platform. From September 2018 to the present, more than 16.5 billion cubic meters have been sold through ETP. m of gas. Elena Burmistrova paid special attention to issues of pricing and the export contract model. Gazprom’s contract model implies favorable prices, reliable and flexible terms of supply, which makes Russian pipeline gas the most competitive on the market. The pricing mechanism in the company’s export contracts effectively adapts to changes in the European market. Low production costs, efficient gas delivery routes and Gazprom’s vast resource base guarantee profitability even during periods of low prices. Famil Sadigov informed about the key results of the implementation of the financial strategy of Gazprom. He emphasized that despite the difficult market conditions, last year Gazprom achieved sustainable financial results. According to preliminary estimates, in 2019 the Group’s net profit exceeded $ 21 billion, revenue – more than $ 120 billion, free cash flow was kept at a positive level. Such results were achieved, including through consistent optimization of operating and investment costs and careful cost control. Famil Sadigov also recalled that in 2019 Russian and foreign investors fundamentally revised the value of Gazprom shares. Over the year, the volume of trading in the company’s securities on the London Stock Exchange grew 2.5 times, on the Moscow Exchange – more than 3 times. By the end of the year, the price of Gazprom shares increased by 87% in dollar terms, the company became the leader of the Russian stock market in terms of capitalization. At the same time, Gazprom sees serious potential for further growth in the value of its securities. One of the main events of 2019 was the adoption of the new Gazprom Dividend Policy. In accordance with the document, the amount of dividends is determined based on the net profit of the Group according to international financial reporting standards, adjusted for five non-monetary items. The target level of payments is at least 50% of IFRS net profit; it is planned to provide dividend financing, first of all, due to free cash flow. Therefore, Gazprom will concentrate even more efforts on ensuring sustainable generation of positive free cash flow in the medium and long term. In particular, the company intends to further increase the efficiency of capital costs, including through the flexibility of the investment program and more active use of methods project financing. Work will continue to reduce operating costs, the company’s goal is to reduce them by 2% per year. In addition, Gazprom’s new and promising projects — Power of Siberia, Turkish Stream, Nord Stream 2, the Amur Gas Processing Plant, and the integrated gas processing and liquefaction complex in Ust- will make a significant contribution to ensuring strong financial performance. The meadow. According to the company’s estimates, at full load they will provide an additional $ 9 billion a year to EBITDA. The company intends to develop relations with representatives of the investment community. Her plans include an increase in the number of meetings of Gazprom Deputy Chairmen with analysts and investors, the volume and quality of information disclosed, including on sustainable development issues, and the introduction of new formats for interaction with the investment community. Gazprom representatives noted that the growth of key production indicators – gas production and supply to Russian and foreign consumers – will help strengthen the company’s position in the global energy sector. At the same time, the optimization of capital costs, the implementation of a flexible and balanced investment strategy will lead to a further increase in the economic efficiency and investment attractiveness of Gazprom in the long term. Currently, Gazprom has been presented to answer questions from investors and analysts. The second meeting within the framework of Investor Day will be held in London on February 13th.
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EDITOR’S NOTE: This article is a translation from Russian Language to English.