Russia 111117 Basic Political Developments

Gazprom

Gazprom offers $1.6bn Eurobond

http://www.rbcnews.com/free/20111117105417.shtml

      RBC, 17.11.2011, Moscow 10:54:17.Gazprom's subsidiary Gaz Capital SA is offering a $1.6bn two-tranche Eurobond on the Irish Stock Exchange today, a source close to the arrangers of the placement told RBC.

      The yield of the first five-year $1bn tranche is 4.95%, while the yield of the 10-year $600m tranche is 6%. BNP Paribas and J.P. Morgan act as joint book-running managers for the offering and IFC Metropol is the lead co-arranger.

      In October, Gazprom placed a six-month $500m Eurobond to yield 3.5%. Until October, the natural gas monopoly had made no borrowings in 2011.

VEB could gain stake in Gazprombank in debt-equity swap

http://www.rbcnews.com/free/20111117110956.shtml

      RBC, 17.11.2011, Moscow 11:09:56.Vnesheconombank (VEB) could gain a 8%-12% stake in Gazprombank after its debt is converted into shares, Alexander Sobol, deputy chairman of the bank controlled by gas giant Gazprom, said.

      During the economic downturn, Gazprombank attracted two subordinated loans for a total amount of some RUB 90bn (approx. USD 2.9bn) from VEB. In October 2011, Gazprombank's shareholders amended the lender's charter, paving the way for an additional share offering of 10m shares with a par value of RUB 1,000 (approx. USD 32.4).

Gazprom Supplied 7% of Europe’s Gas at Spot Rates in Last Year

http://www.bloomberg.com/news/2011-11-16/gazprom-supplied-7-of-europe-s-gas-at-spot-rates-in-last-year.html
Q

By Anna Shiryaevskaya and Denis Maternovsky - Nov 16, 2011 9:00 PM GMT+0100

OAO Gazprom supplied 7 percent of total gas supplies to Europe at prices linked to spot rates last year after revising contracts with some customers, the Russian gas exporter said in a bond prospectus obtained by Bloomberg.

Gazprom conducted negotiations last year with customers including EON AG’s Ruhrgas unit, Eni SpA (ENI), GDF Suez (GSZ) SA. They sought to revise prices under contracts because of oversupply in Europe and a gap between spot and long-term prices, according to a preliminary bond prospectus dated Nov. 11, a copy of which Bloomberg News obtained.

Gas importers in Europe, who buy about two-thirds of their fuel under long-term contracts, have pressured Gazprom to change its pricing formulas after spot rates fell. The Russian gas producer, which indexes its prices to oil with a lag of as long as nine months, agreed to give weight to gas prices at European hubs in talks with some clients last year.

“While we are including trading floor quotations in some of our contracts, we generally consider this pricing mechanism to be unsuitable for determining prices under our long-term contracts due to its volatility and lack of predictability,” Gazprom said in the prospectus.

Over the past year, E.ON Ruhrgas, RWE’s Transgas unit, Erdgas Import Salzburg GmbH and Poland’s PGNiG started arbitration against Gazprom, demanding a review of long-term contract prices, according to the prospectus. The company is continuing talks with a number of importers, including EON, RWE and Eni, the prospectus said

Sergei Kupriyanov, a spokesman for Gazprom, declined to comment on information in the prospectus.

Gazprom shipped about 139 billion cubic meters of gas to Europe last year and expects export volumes to increase to at least 151 billion cubic meters this year, Sergei Chelpanov, deputy head of the state-run company’s export unit, said Nov. 9.

To contact the reporters on this story: Anna Shiryaevskaya in Moscow at [e-mail]; Denis Maternovsky in Moscow at [e-mail]

To contact the editors responsible for this story: Will Kennedy at [e-mail]; Gavin Serkin at [e-mail]

Gazprom mulls boosting gas exports to India

http://www.rbcnews.com/free/20111117114838.shtml

      RBC, 17.11.2011, Moscow 11:48:38.Russian-Indian energy cooperation was on the agenda of a meeting held yesterday between Gazprom's CEO Alexey Miller and India's Ambassador to Russia Ajai Malhotra, the gas giant said in a statement.

      Specifically, Miller and Malhotra discussed liquefied natural gas (LNG) deliveries to India. Gas consumption in that country is expected to surge 1.7-fold by 2020, Miller noted, emphasizing that this market has opened great opportunities for Gazprom, which is considering boosting its export capacities.

Gazprom discloses its subsidiaries’ investment programmes

http://www.bne.eu/dispatch_text17820

VTB Capital

November 17, 2011

News: Vedomosti has run an article about Gazprom announcing its investment programme together with its subsidiaries. The paper speculates that planned investments for 2011 amount to USD 41bn (USD 51bn, including Gazprom Neft and Gazprom Energoholding).

Our View: The disclosed figures are in line with the company’s previous guidance of USD 39-46bn. The additional investments of Gazprom Neft and Gazprom Energoholding are not directly paid by Gazprom, and therefore should not be considered together. Gazprom’s investment programme remains one of the greatest concerns about the company’s investment case.

Gazprom to spend $4 bln on Sochi Olympic projects

http://english.ruvr.ru/2011/11/16/60501493.html
Chupina Maria, Tatiana Dolgova

Nov 16, 2011 18:37 Moscow Time

The investments of Russia’s energy giant Gazprom into the Olympic projects in Sochi will reach about $4 billion. In total five large-scale projects are to be implemented under the target program “Construction of the Olympic facilities in Sochi’s development as a mountain climate resort”.

The first project is the Dzhubga-Lazarevskoe-Sochi gas pipeline which was put into operation in June.  The 171 km long pipeline has annual throughput capacity of almost 4 billion cubic meters. The launch of the pipeline enabled the switch of a number of Sochi boiler rooms from heating oil and coal to natural gas. The investments in the project reached one billion dollars. In the second half of the 2012, Gazprom plans to launch the Adler thermal power plant, which will provides electricity and heat not only to the Olympic facilities but also to a number of settlements and mini-districts of Sochi, head of Gazprom's department for special projects and research Matvei Geller said.

"The plant uses modern technologies of gas-steam cycle, which ensures a high key performance indicator – more than 52%. It also uses special closed water cooling cycle technologies, which prevent additional emissions into the atmosphere and make the plant 30% more environmentally friendly than  similar plants in other regions of the country."

One more Olympic project sponsored by Gazpom is the construction of the sport complex for ski and biathlon competitions at the Krasnya Polyana settlement near Sochi and of the Olympic Village for 1,100 guests.

At present the construction of the second stage of a mountainous touristic center is under way. The center will be capable to receive more than 12,000 people per hour. The center’s infrastructure includes 15 km long ski runs, a cultural center, bowling, restaurants and shops. It total Gazprom’s investments in the construction of the sport and tourist complex at the Psekhako mountain range will reach  at least $2 billion. When constructing the facilities the company is also paying particular attention to nature protection activities, Geller stresses.      

"Only this year we have transplanted 3,000 of rare plants from the area of the construction and resettled about 300 animals mainly amphibians from the area. In total over the last 2 years we planted about 6,000 of plants and resettled around 500 animals. By now we have conduced about 150 nature protection activities."

Gazprom has already spent about $3 million on nature protection projects. Besides that, the gas giant is financing the mountainous highway, which leads up to the Psekhako mountain range and will be completed by 2013.  However the load of this road will be relatively small because most of the viewers of the Olympics will use cableways to get to the Olympic facilities in the mountains. Two cableways will be located in the lower platform of Gazprom’s mountainous touristic centre and one more at the Alpica Service railway station where speed trains from Sochi will arrive to.  

The experts from the International Olympic Committee who inspected the energy supply plants of the Olympic facilities have remained satisfied with their condition.

16. 11. 11. - 16:04