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Certain Statements by First Vice President of Transneft Maksim Grishanin at Teleconference with Investors and Analysts

Date of publication: 7 December 2020

First Vice President of Transneft Maksim Grishanin has answered topical questions of investors and analysts during a teleconference organised to discuss the Company's newly published IFRS statements for the 9 months of 2020.

Oil Transportation Plans

Based on conservative plans, Transneft plans to maintain oil pumping in 2021 at the level of 2020 and to pump 440-450 million tonnes of oil, said First Vice President of the Company.

Mr. Grishanin noted that these parameters correspond to the current year’s plans, but added that they might be revised in Q1 2021.

“As of today, we plan to pump around 440-450 million tonnes of oil next year. If the final agreements of OPEC+ are formed - we are talking about Q1, it is not clear what will happen in 2H, so for now we proceed from the conservative scenario - i.e. the volume will be approximately at the level of 2020, adjustment and revision will be possible in Q1,” said Mr. Grishanin.

Dividend Policy

Transneft’s dividend policy revision issue is overdue, but the decision rests with the Russian Ministry of Finance, Mr. Grishanin continued, answering the questions of analysts. 

“True, the dividend policy revision has long been overdue. The Ministry of Finance is preparing a document highlighting new approaches to the dividend policy pursued by state-owned companies: as soon as it is released, we’ll adjust our dividend policy,” said First Vice President.

He expects the new approach of the Ministry of Finance to state-owned enterprises' dividends can have been approved by May 2021.

The state, as the main shareholder of Transneft, considers the allocation of 50% of the IFRS net profit, rather than the free cash flow, as a clear metric, said First Vice President of the Company.

Operating Expenses

According to Mr. Grishanin, the operating expenses of Transneft will reduce by more than 10% in 2020, while specific expenses will increase.

“The key factor is fuel and energy resources, energy efficiency and additional factors related to operating activities,” he explained.

“Yet specific operating expenses will grow because of reduced transportation volumes,” First Vice President added.

Oil Quality

There is no more contaminated oil in Transneft’s system in the territory of Russia after the accident at the Druzhba oil pipeline in spring 2019, First Vice President of the Company said during the teleconference.

“Speaking of contaminated oil, we’ve addressed this issue so there’s no more contaminated oil in our system in Russia right now,” he said.

According to First Vice President, Transneft plans to have completed paying compensations for contaminated oil in the Druzhba oil pipeline by mid-year 2021.

“As of the present date, we’ve already paid USD 143.6 million and this work continues. In our estimation, this is more than half of the amount,” he said.

Mr. Grishanin added that the Company expects to settle the dispute over the issue of substantial compensation with one more consignor till the end of 2020.

NCSP

“By the end of 2020, Transneft expects stabilisation of transshipment volumes of dry cargo at Novorossiysk Commercial Sea Port,” First Vice President informed. According to him, this won’t happen with liquid cargo.

“We see a decrease in turnover mainly due to a decrease in liquid cargo turnover due to lower oil transshipment starting from 1 May 2020. Dry cargo turnover dropped by 12% while liquid cargo - by 23%. We expect to level off this parameter for dry cargo by the end of the year, but this will not happen for liquid cargo,” said Mr. Grishanin.

Adapted from Interfax, TASS and Prime
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