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Russia’s Gazprom Lifts 2019 Borrowing To $11B

Russia’s gas giant Gazprom is raising its borrowing target for this year 2.4 times to US$11.1 billion (725 billion Russian rubles), a source familiar with the plan told Russia’s news agency Interfax.

Gazprom is currently reviewing its budget after the end of the first half of the year and has decided to raise the borrowing target from US$4.56 billion (298 billion rubles) to US$11.1 billion (725 billion Russian rubles), the source said.

Gazprom has said that it is moving to a policy to refinance debt with new borrowings.

Last year, the Russian gas giant—which holds more than a third of the gas market in Europe—raised its borrowing program after reviewing it halfway through the year to US$11.3 billion (740 billion rubles) from the initially planned borrowings worth US$6.4 billion (417 billion rubles).

Despite the significant increase in the borrowing program for 2019, Gazprom’s investment program stays practically unchanged after the budget review, according to Interfax.   

Gazprom’s financial results for the second quarter of 2019 showed at the end of August that as of Q2, the company’s total debt maturity profile consisted of 13 percent of debt maturing in less than a year, 18 percent of its debt is due within one to two years, 44 percent of Gazprom’s debt matures in two to five years, and 25 percent of its debt has maturity dates more than five years from now.  

Meanwhile, Maros Sefcovic, the European Commission Vice President in charge of the Energy Union, said on Monday that he would host on September 19 the trilateral EU-Russia-Ukraine talks on the gas transit agreement for Russia shipping gas through Ukraine onto Europe.

“I am convinced that progress would send a strong positive signal to market as well as consumers ahead of the winter season,” Sefcovic said on Twitter.

The current ten-year gas transit agreement between Russia and Ukraine expires at the end of this year. Russia has been building pipelines to Europe and Turkey that bypass Ukraine—TurkStream and Nord Stream 2. Ukraine, for its part, is a key transit country for Russian gas westwards to Europe and relies on the gas transit fees.

The talks between Ukraine and Gazprom on the gas transit to Europe have been complicated by the tense relationship between Ukraine and Russia. As the deadline to striking a new transit deal approaches, Ukraine has been filling up gas storage to higher than usual levels in case supplies from Russia were interrupted.

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By Tsvetana Paraskova for Oilprice.com

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