Gazprom targets $6bn asset sale as export earnings slide
Gazprom, the world’s biggest natural gas producer, is considering asset sales, freezing dividends and increasing its borrowing as export earnings wane, according to its threeyear budget.
The state-controlled firm aims to raise 350-billion roubles ($6bn) from asset sales in 2017, while borrowing may climb to 288-billion roubles and more than double from that level in 2018, a copy of the document obtained by Bloomberg shows.
Dividend payments are forecast at the 2016 level through 2019, according to the plan, approved by the board in December.
Despite a rebound in crude oil, which dictates the price for most of Gazprom’s export contracts, the proposed budget shows the company remains under pressure as it tries to finance new pipelines to Europe and Asia.
Gazprom needs to increase borrowing to “ensure liquidity and cover obligations” at oil prices close to current levels, according to the budget.
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No final decision had been made on asset sales, two people with knowledge of the issue said, asking not to be identified because the information is not public. Gazprom’s press service declined to comment. The stock lost as much as 1.7% in Moscow to the lowest intraday level since November 18.
Management planned to sell Gazprom’s stake in Gascade Gastransport, which operates more than 2,400km of gas pipelines across Germany, possibly in 2017, Interfax reported, citing unidentified people.
There were several potential bidders, the newswire said.
The Moscow-based exporter acquired 49.98% in the grid through an asset swap with Germany’s BASF in 2015.
Gazprom has not sold such a large amount of assets since 2010. Back then, it disposed of 9.4% of its largest domestic competitor, Novatek, for 57.5billion roubles, classifying its remaining 9.9% stake as an asset for sale.
The shares, which have a value of about 215-billion roubles based on Moscow trading, could be a candidate, said Raiffeisen Centrobank analyst Andrey Polischuk.
Gazprom was considering various options for raising cash using the Novatek stake, including a possible sale, the people said. The energy giant may earmark some Novatek stock for the sale of convertible bonds, according to one of the people and another person who asked not to be named. No decisions had been made, they said.
Novatek has offered to buy four gas fields from Gazprom in Russia’s north, which the staterun company is now assessing. The fields could be valued at about $1bn, RBC news service reported in December.
Another asset, which deputy chief Andrey Kruglov said could be sold or used for convertible bonds, is 6.6% of Gazprom itself, a stake that has a market value of about 230-billion roubles.
The company bought half of those shares in 2016 to help the government bail out a state lender.