Moscow: Gazprom PJSC, the world’s biggest natural gas producer, is considering asset sales, freezing dividends and increasing its borrowing as export earnings wane, according to its three-year budget.
The Russian state-controlled company aims to raise 350 billion roubles (around $6 billion) from asset sales this year, while borrowing may climb to 288 billion roubles and more than double from that level next year, a copy of the document obtained by Bloomberg News show. 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 financial 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.
No final decision has been made on asset sales and there is no set time frame, two people with knowledge of the issue said, asking not to be identified because the information isn’t public. Gazprom’s press service declined to comment. The stock lost as much as 1.7 per cent in Moscow to the lowest intraday level since Nov. 18.
Management plans to sell Gazprom’s stake in Gascade Gastransport GmbH, which operates more than 2,400 kilometres of gas pipelines across Germany, possibly this year, Interfax reported, citing unidentified people. There are several potential bidders, the newswire said. The Moscow-based exporter acquired 49.98 per cent in the grid through an asset swap with Germany’s BASF SE in 2015.
Gazprom hasn’t sold such a large amount of assets since 2010. Back then, it disposed of 9.4 per cent of its largest domestic competitor, Novatek PJSC, for 57.5 billion roubles (about $1.9 billion at the time), classifying its remaining 9.9 per cent stake as an asset for sale. The shares, which currently have a market value of about 215 billion roubles based on Moscow trading, could be a candidate, said Raiffeisen Centrobank AG analyst Andrey Polischuk.
