Gazprom says it updated its budget due to acquisitions of Sakhalin Energy, Beltransgaz and Mosenergo – as well as to finance a list of investment projects.
Friday, June 01, 2007
By Robert Duncan
Gazprom’s Management Committee has updated the company’s 2007 budget, earmarking an additional RUR232.92 billion for investments above the RUR762.3 billion that was approved in January. The updated budget must still be approved by Gazprom’s Board of Directors.
Gazprom said it needed to update its budget due to the acquisitions of Sakhalin Energy, Beltransgaz and Mosenergo. Additionally, Gazprom said the modification to its budget stems “in particular from the need to adjust a list of investment projects and investment scope. The budget adjustments can also be explained by lower gas marketing volume due to the anomalously warm winter 2006-2007, change in macroeconomic rates.”
Capital investments will also be channeled to reconstruct primary gas production facilities, technically reequip underground gas storage facilities, carry out engineering and design and geological exploration and conduct production drilling in fields, Gazprom said.
Gazprom is currently involved in several gas production projects, such as the constructing of infrastructure for the Kharvutinskaya area of the Yamburgskoye field, the Bovanenkovskoye and Kharasaveyskoye fields, and developing the Shtokman and Prirazlomnoye fields. Additionally, facility construction will continue on the Yen-Yakhinskoye, Urengoyskoye, Zapolyarnoye and other fields.
As far as gas transmission projects, Gazprom is constructing the Northern Tyumen Oblast – Torzhok gas pipeline, expanding the Urengoy gas transmission hub, expanding northwestern Russia’s gas transmission network that aims to deliver gas via the Nord Stream gas pipeline, as well as constructing gas branch pipelines and gas distribution stations and upgrading gas transmission facilities.
Looking At The Numbers
Breaking down the numbers, the budget draft calls for RUR319.78 billion in capital investments, or RUR40.78 billion less than what was originally approved in January. On the other hand – and showing where the company is placing emphasis – long-term investments will make up RUR442.52 billion, or almost RUR 274 billion than the original budget.
The long-term financial investments plan for 2007 contemplates financing upstream projects in the Republics of Tadzhikistan and Kyrgyzstan, Block 112 of the Republic of Vietnam, India’s Bengal Bay and the Ustyurt region of the Republic of Uzbekistan.
Additionally, the plan embraces granting long-term loans to Gazprom’s subsidiaries operating on the Yuzhno-Russkoye field, in the Krasnoyarsk Krai, Venezuela and the Caspian Sea offshore.
Looking at earnings, according to the updated draft budget Gazprom’s overall cash income and revenues will make up RUR2,277 trillion, or RUR289 billion less than the January budget.
Liabilities, expenditures and investments are no projected to increase by RUR93 billion, to account for RUR2,749 trillionn. The total financial borrowings are projected at RUR421.2 billion.
“The increase in borrowings is driven by the need to finance the acquisition of new assets. Financial borrowings for the current production and operating activities will remain unchanged at RUR90 billion,” Gazprom said, adding that net surplus will be RUR 1.3 billionn.
Robert Duncan is a journalist and ombudsman for foreign press in Spain. He is an Executive Board Member and Vice-President for the Organización de Periodismo y Comunicación Ibero-Americana, and Vice-President of the energy and telecommunications association, APSCE. He is News Editor for Spero News, and Editor-In-Chief of EnerPub. More of his writings can be found here, as well as at the Santificarnos website.
He has also been published in World Catholic News, National Catholic Register, Renew America, Lifesite.net, as well as Capital Hill Coffee House, Common Conservative, The Conservative Voice, Enter Stage Right, News By Us, Conservative Crusader, World Net Daily, Mens News Daily and others. Robert was the bureau chief for an international news agency in Madrid for many years, and was published regularly in Dow Jones Newswires, with articles appearing in The Wall Street Journal.