Gazprom Ups 2018 Budget as Ruble Weakens
Russian state-run gas giant Gazprom’s management committee is to put a revised, increased investment budget for 2018 to its board for approval, it said September 5.
Gazprom has increased its overall amount of investments budget in ruble equivalent by 17% to rubles 1,496.328bn ($21.9bn) compared to the previous investment program approved in December 2017. But it is the same amount in foreign currency, as the Russian ruble has devalued since.
According to the new draft budget, planned 2018 capital investments will increase by 23% to rubles 984.263bn. Expenditures on acquiring non-current assets will increase two-fold to rubles 84.806bn, while long-term financial investments will decline by 3% to 427.259bn rubles.
The company’s external financial borrowings amounted to rubles 518bn, 24% more than in its previous 2018 plan. The approved financial plan will provide for a full coverage of the company’s liabilities without a deficit, the statement said.
The adjustments to the 2018 investment program for 2018 were caused by higher investments into Gazprom’s priority gas transmission and liquefaction (LNG) projects, including the development of the gas transmission system in northwestern Russia and the construction of an LNG production, storage and shipment complex in the neighborhood of the Portovaya compressor station.
German technology firm Linde said Feb.2017 it had been selected by Gazprom and its Russian project manager SRDI Oil & Gas Petron as licenser for a mid-scale liquefaction complex at Portovaya on the Russian Baltic coast; it will have capacity to produce 1.5mn mt/yr and is being developed near the export terminal of Gazprom's planned 55bn m3/yr Nord Stream 2 pipeline project.
Gazprom said in a meeting with shareholders June 29 that it plans to repay $15.2bn of debt in 2018. Its total debts until the end of 1Q2018 stood at rubles 3,361bn ($49.2bn).
Russian gas giant reported August 29 a 1H2018 profit of rubles 663.55bn ($9.7bn), up by 63% on the same period last year. Operating profit was up more sharply, from rubles 484.4bn to rubles 879.3bn.
Gazprom has been trying to step up its use of Russian technology and contractors, given tightening US and EU economic sanctions, with moderate success. But the proposed budget increase shows that its investment budget remains heavily exposed to international prices and the weaker ruble. Gazprom's CEO continues to welcome and woo foreign investors, despite him being put on a US watch list in April.