On 12 April 2017, First Vice President of Transneft held a meeting with media representatives and answered a number of questions about the Company’s activities.
On crude oil fed to Transneft system
The oil fed to the system of Transneft pipelines by Russia’s oil companies since the beginning of 2017 remains at the level of 2016, whereas earlier the volumes kept growing year-on-year, Mr Grishanin said to journalists.
In his words, crude fed to the system of Transneft oil trunk pipelines normally grows at the rate of 2% a year, but this year we see no growth. Mr Grishanin suggested that this can be a result of curbing the production, as was agreed with the world’s leading producers.
He also informed that this year, the crude pumped via the Zapolyarye – Purpe oil trunk pipeline can be near 5 million tonnes. First Vice President explained that oil companies develop oil fields slower than was planned earlier.
On dividend payment
Mr Grishanin let journalists know that the management of Transneft would propose to the government, the Company’s main owner, to set the amount of dividends for 2016 in accordance with the Company’s approved dividend policy.
“We propose to follow the Company’s dividend policy, as we have no other opinion. I believe, 25% in the present-day situation is already a decent figure; a higher percentage could be discussed after we complete the extension of the ESPO system in 2020,” said First Vice President. The Company expects a directive on dividends in May.
Answering the question about the plans to align dividend payments on ordinary and preferred shares of Transneft, Mr Grishanin explained that the principal owner agreed with what the Company proposed regarding the dividend distribution over the years. “We always felt that dividends on preferred shares should equal those on ordinary shares and proposed this plan to the owner who twice made a different decision, in 2013 and 2015,” he specified.
On bond placement
In 2017, Transneft can place bonds worth RUB 60 billion, informed First Vice President. He explained that the funds raised would be used partly for early redemption and partly for refinancing. “And then much will depend on the market: in case of low interest rates for term loans, we’ll borrow a bit more for partial preterm repayment of the Chinese loan,” added Grishanin.
Talking about the Chinese loan attracted by Transneft earlier, he informed that as of the present day the Company had to repay about USD 8 billion.
Mr Grishanin also told the journalists that the public debt as a fund-raising option is more acceptable for the Company. “The cost of public securities is transparent: they are traded at the stock exchange and there are no extra terms there, as is usually the case in loan agreements; the rate is fixed and cannot be altered. This is a more predictable instrument,” explained First Vice President, commenting on the Company’s choice in favour of bond issue.
In his words, this year Transneft plans to repay RUB 117 billion of its debt.
On negotiations with Chinese partners
On 13 April 2017, Transneft will hold negotiations with Chinese partners on the volume of crude supplies via the Skovorodino – Mohe pipeline offshoot (part of the Eastern Siberia – Pacific Ocean pipeline system) in 2018. In accordance with the intergovernmental agreement, they must rise to 30 million tonnes a year, informed Mr Grishanin.
According to him, the Chinese side unofficially asks for 3.5 million tonnes less. “Our position is 30 million tonnes; if they take less, the Ministry of Energy will have to figure out how to transport 3.5 million tonnes there,” he said, adding that for its part the Russian Company has completed all construction works.
On a suit against Sberbank
Answering the question regarding the suit brought up by Transneft against Sberbank, Mr Grishanin pointed out that the bank did not notify the Company of all risks involved in the deal with derivative financial instruments.
“We believe that when banks offer a certain product to clients they must follow a compliance policy identifying an appropriate circle of clients, since some products can be offered only to banks and financial institutions,” he said, adding that nobody expected a crisis in 2014, but Sberbank did not fully inform the Company about all risks involved in this product.
On tariffs for the Kuyumba – Tayshet oil pipeline
Tariffs on oil transportation via the Kuyumba - Tayshet oil pipeline will be discussed at the Federal Antimonopoly Service (FAS) in late April, informed Mr Grishanin. In his words, the Company’s position remains unchanged.
On possible sale of NCSP shares
Answering the question of journalists, Mr Grishanin informed that for now there are no specific solutions regarding the sale of shares of Novorossiysk Commercial Sea Port (NCSP). At the present time, Transneft does not hold negotiations with potential buyers of its stake, waiting for a decision from the government.
“For now, we are not in talks with anybody about the sale of NCSP shares,” said Grishanin. “It’s not us who make the sale decision. When we have this decision on hand, then we’ll start negotiations,” he added.
First Vice President explained that a respective decision must be made by the government as the main shareholder of Transneft.
Mr Grishanin also informed that following the sale of its stake in Novorossiysk Commercial Sea Port his Company may discuss with the new owner the possibility of buying out Primorsk Commercial Port. “We should talk with new shareholders to see how much NCSP Group might want for this asset,” he added.
First Vice President of Transneft noted that now port of Primorsk is part of NCSP Group and it does not seem possible to buy it out.
On supplies of crude to Belarus
At the present time, Transneft is ready to ramp up crude supplies to Belarus to 24 million tonnes in 2017, but should the decision-making about the increase of supplies is pushed back to late April, this year the said volume of supplies will become technically unfeasible, reported First Vice President, answering the question.
“We can ensure the delivery of 24 million tonnes, but if this decision is made only in late April, the volume of supplies won’t reach 24 million tonnes by year’s end,” he said.