Gazprom sets up risk fund
Russia's Gazprom announced late on October 19 it would be setting up a reserve fund of 726bn rubles ($10.2bn) by the end of the year to manage possible risks, despite forecasting record revenues from gas sales on the back of a spike in prices.
Gazprom said it was keeping its 2021 investment programme unchanged at 1.19 trillion rubles, including 1.02 trillion rubles in capital expenditure. It said it was basing this plan on an average gas price of $269.6/'000 m3 in its long-term contracts with its European customers.
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"Compared with the initial plan, the proceeds from gas sales have increased by almost 30%, which will allow Gazprom to reach a historic record level of revenues in 2021," the deputy chairman of Gazprom's management committee, Famil Sadygov, commented on October 19.
Gazprom expects its core earnings to nearly double to more than $45bn this year.
Sadygov said its reserve fund would provide "necessary budget strength and resistance to volatility in the external environment."
Gazprom has faced criticism for not sending additional gas to Europe beyond contractual volumes, although it is unclear how much spare production capacity the company has. Its sales volumes to countries outside the former Soviet Union are up 13% so far this year.
Some EU lawmakers have called on the European Commission to investigate Gazprom for anti-competitive behaviour. Meanwhile, Gazprom's Nord Stream 2 project remains up in the air. Though the pipeline has been declared ready to pump gas, regulators in Germany are still in the process of deciding whether its operating company, 100%-owned by Gazprom, qualifies as an independent operator.
Ukraine's Naftogaz, which has asked to have a say in the operator's certification process, argues that it should not be certified as the pipeline does not comply with European legislation.