|Bid||0.00 x 610000|
|Ask||0.00 x 268000|
|Day's Range||446.40 - 453.85|
|52 Week Range||390.75 - 464.70|
|Beta (3Y Monthly)||N/A|
|PE Ratio (TTM)||7.29|
|Earnings Date||Feb 3, 2020 - Feb 7, 2020|
|Forward Dividend & Yield||26.67 (5.87%)|
|1y Target Est||7.72|
(Bloomberg Opinion) -- Twelve of the 658 pages in the just-published Saudi Aramco prospectus list the banks, law firms and consultancies midwifing this gargantuan IPO. Much further back, you will find the third-party certification of the company’s oil and gas reserves. Including the cover letter and two sets of signatures, this clocks in at 10 pages.If that strikes you as a tad unbalanced, consider the IPO of another state-owned energy behemoth, Rosneft Oil Co. PJSC, the Russian oil champion. The third-party assessment of its oil and gas reserves published in its 2006 prospectus runs to 135 pages, incorporating detailed field-by-field analysis of reserves, pricing and different scenarios. To be fair, Saudi Arabian Oil Co. has another 16 pages of more qualitative material on its upstream operations under the business-description section; on the other hand, that bit ran to more than 50 pages for Rosneft. True, Rosneft’s upstream business was a somewhat complicated affair given its then-recent, er, bargain acquisition of what had been Yukos. Still, it just isn’t a good look that, despite seeking a valuation 15 times Rosneft’s current enterprise value, Aramco has chosen to publish an upstream assessment that looks like a pamphlet in comparison.Sometimes, it’s the stuff that doesn’t make it onto the page that can end up defining a great work. Aramco’s refining and chemicals operations could also use more detail. The prospectus provides high-level, combined financial numbers for these businesses, as well as for their major joint ventures and associates. It also provides high-level data on overall production of refined products and chemicals, including throughput at major refineries. This is all good. But in terms of getting at the underlying economics of the businesses, especially margins, it leaves much to be desired — or, in modeling terms, assumed. Again, even Rosneft provided per-unit costs for its refining business, as well as realized pricing for products.Refining and chemicals amounted to less than 2% of Aramco’s operating income last year, so it could be argued what’s there in the pages is fine. But as Aramco’s own marketing tells us, expanding the downstream business is a priority — why else spend $69 billion for control of Saudi Basic Industries Corp.? Downstream operations are set to consume a quarter of the company’s $40 billion-plus annual capex budget.Similarly, 40% of that budget is allocated to developing Aramco’s natural gas operations. Again, however, there is little disclosure about the economics of this business, apart from a summary of the resources, some price assumptions in the third-party upstream assessment and a qualitative description of the mechanism whereby Aramco gets compensated by the government for selling domestic gas at below-market rates.Altogether, therefore, roughly two-thirds of Aramco’s capex is earmarked for developing businesses that are likely to suppress its return on capital relative to upstream operations, at least in the near term. Even if these businesses are relatively small for now, helping investors get a more detailed understanding of what sort of profits (or losses) they have generated seems like a small ask.I would say that, of course, but then Aramco isn’t selling stock to me. The point is that the best outcome from this IPO for both the company and its state owner would be eager participation by global money managers. Aramco has shied away from an international listing; Rosneft’s more detailed disclosure reflects its choice of London. Persuading rich Saudi Arabians to chip in may help with the day-one headlines, but the economic effect is more akin to domestic taxation than injecting foreign capital.Greater transparency could help with the latter; and, who knows, maybe it will be offered in the safer spaces of the road show. A one-dollar move in assumed refining margins shifts Aramco’s valuation by less than $24 billion, or 2%, according to my calculations. But a move of just half a percentage point in the discount rate (read: expected dividend yield) adds up to more than $130 billion. That seems worth giving away a little more.To contact the author of this story: Liam Denning at email@example.comTo contact the editor responsible for this story: Mark Gongloff at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Liam Denning is a Bloomberg Opinion columnist covering energy, mining and commodities. He previously was editor of the Wall Street Journal's Heard on the Street column and wrote for the Financial Times' Lex column. He was also an investment banker.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
Russian oil company Rosneft has accused the US Treasury of “hypocrisy” in its approach to sanctions against Venezuela, and hit back at US criticism of the company’s work in the country. that Kremlin-controlled Rosneft, which has extensive operations in the South American country was “really central to the regime’s survival,” referring to the administration of president Nicolás Maduro, which Washington says is illegitimate. Rosneft described the comments as “unlawful accusations” and said the recent decision by the Office of Foreign Assets Control, which oversees US sanctions, to grant permission for western oil companies Chevron, Halliburton, Schlumberger, Baker Hughes and Weatherford to continue to work in the country was hypocritical.
(Bloomberg Opinion) -- It’s just been six months since the biggest crisis for Russian oil distribution in living history, and the leader of the country’s largest oil company is already flinging mud in the direction of the world’s other two giant oil producers, Saudi Arabia and the U.S.On Thursday, speaking at the Verona Forum, Igor Sechin, chief executive officer of state controlled Rosneft PJSC, which produces more than a third of Russia’s crude, said it was time to “reassess Saudi Arabia’s role as the unconditionally reliable oil supplier” in light of last month’s drone attack on Saudi oil infrastructure. Then he turned his sights on President Donald Trump’s decision to pull the U.S. out of the Iran nuclear deal, saying it was “a serious blow to security of supplies from the Middle East.”He also questioned how long America’s shale boom would last, suggesting that the long-term potential is unclear, especially without more in-depth study of the resource base underpinning the industry there.Sechin has always been a champion of the Russian oil industry, and he’s been consistent in his opposition to the output restraint that followed President Vladimir Putin’s decision to join Saudi Arabia and the rest of OPEC in managing oil supplies.In Verona, he was right of course at least as far as Saudi Arabia was concerned. The attack on the kingdom’s oil-processing facilities at Abqaiq and Khurais was something the industry had long feared, but it still took everyone by surprise — not least the people in charge of the country’s air defenses. It revealed that Saudi Arabia’s oil infrastructure is more vulnerable to attack than almost anyone could ever have imagined and called into question the kingdom’s long-held role as the world’s oil security blanket. The risk factors section of the prospectus for Saudi Aramco’s IPO could do with an addendum.He was not completely wrong about the U.S. either.The country’s output growth has slowed dramatically this year and its second shale boom is nearly over. Over the past three months the Energy Information Administration has halved its forecast for incremental U.S. oil production over the course of next year. It now sees the country boosting output by just 370,000 barrels a day between December 2019 and December 2020.Russian oilmen have always been suspicious of the shale boom. While I was running a course for oil executives outside Moscow in 2013, I was informed that my projections for continued growth in output from U.S. shale were wrong and that the boom would be over in a matter of months. Sechin is simply following a well-trodden path.Of course his unspoken corollary to critiquing the world’s other two giant oil producers is that Russia is the only one that is a reliable source of future supply.But he clearly has a very short, or very selective, memory. As recently as April Russia had its own reliability crisis.Crude in the Druzhba pipeline, which carries about 1.5 million barrels a day of Russian oil to international markets, was found to be contaminated with organic chlorides. The episode not only shut down the country’s main oil export artery to Europe for the first time ever, it undermined confidence in Russia’s own position as a reliable oil supplier. It also reminded the world that the nation’s shipments are - just like those of Saudi Arabia - reliant on some very specific pieces of infrastructure.What’s more the contamination was caused by issues that Russia has yet to fully address, with investigators pinning blame on a band of black marketeers working in concert with a local company that had access to the country’s pipeline system. And the impact of the contamination has lingered, with crude flows in Poland and the Czech Republic briefly halted again in June when excess organic chlorides were detected once more. The Druzhba crisis caused Russia “very serious damage” economically, financially and in terms of public image, according to Putin.So before Sechin flings mud at the world’s other big oil producers, he’d do well to remember that there are no oil supplies anywhere in the world that are perfectly secure — Russia’s included. Russia and Saudi Arabia have both shown themselves able to weather their respective crises. But each has had its veneer of invincibility tarnished this year and that’s just two more little cracks in oil’s image as the world’s most important source of energy.To contact the author of this story: Julian Lee at email@example.comTo contact the editor responsible for this story: Melissa Pozsgay at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Julian Lee is an oil strategist for Bloomberg. Previously he worked as a senior analyst at the Centre for Global Energy Studies.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
(Bloomberg) -- Venezuela’s opposition scored a last-minute victory Thursday as the Trump administration stepped in with a measure to protect the nation’s most prized asset abroad from creditors before a key debt payment.The U.S. Treasury Department updated its sanctions guidelines to temporarily put transactions pertaining to Petroleos de Venezuela’s 2020 bonds, backed by 50.1% of Citgo Holding Inc.’s shares, on the same footing as other financial deals that are prohibited. Timing was of the essence: Advisers to National Assembly President Juan Guaido said they lacked the funds to make a $913 million debt payment due Monday.Washington’s decision to block holders of PDVSA’s 2020 bonds from seizing their collateral for 90 days followed months of lobbying by Venezuelan opposition leaders. They warned that losing Citgo would be a political catastrophe for Guaido, whom the U.S. and almost 60 other countries recognize as the nation’s rightful leader. With the Trump administration’s support, Guaido and his allies effectively run Houston-based Citgo, yet have little operational control over its parent PDVSA.Citgo said in a statement that it’s “gratified” by the decision, while Guaido’s office said it “welcomes” the move.“We will continue working in all legal ways to achieve the irrefutable protection of this and all the assets of the Venezuelan people,” Guaido’s office said. “This amendment from the U.S. Treasury Department recognizes the strategic value of Citgo for the present and future of Venezuela.”Guaido’s team also faces a cash crunch. While the U.S. froze accounts linked to Nicolas Maduro’s regime, it has refrained from handing them to the Venezuelan opposition out of fear that it would prompt litigation from creditors. Even if that money was available, Guaido would’ve needed approval from the National Assembly. Last week, the legislature passed an accord calling the PDVSA 2020 bonds unconstitutional because they weren’t approved in the first place.“The Treasury Department is giving a strong signal that it wants creditors and the Guaido administration to reach a refinancing agreement,” said Francisco Rodriguez, director of Oil for Venezuela. “What Treasury has essentially done here is grant the Guaido team the 90-day truce they requested.”The PDVSA 2020 bonds rallied Thursday by the most since December 2017 as investors took some relief that the Trump administration left room for a deal in the coming months. The notes now trade at 34 cents on the dollar from about 90 cents in June.London-based Ashmore Group Plc holds about half of the bonds, according to data compiled by Bloomberg. BlackRock Inc., T Rowe Price Group Inc. and the Royal Bank of Canada are among the other largest reported holders.Right-wing groups, including Grover Norquist’s Americans for Tax Reform, had argued that the Trump administration should refrain from intervening because that would interfere with property rights. But a bipartisan bloc of U.S. senators and representatives including Marco Rubio, Ted Cruz and Lizzie Fletcher urged the president to take action.They argued that a PDVSA default would open the door for Russia’s state oil giant Rosneft to take control of Citgo shares. PDVSA pledged a 49.9% stake in the Houston-based refiner to Rosneft as collateral on a loan in late 2016. Rosneft said earlier this month that it “has no intentions to enter into real ownership and management of the company.”U.S. Treasury Secretary Steven Mnuchin has previously said that, in the event of a PDVSA default, Citgo’s loan from Russia would be reviewed by the department’s Committee on Foreign Investment in the U.S., which can derail deals on national security concerns.(Adds Citgo and Guaido statements in fourth and fifth paragraphs.)To contact the reporter on this story: Ben Bartenstein in New York at email@example.comTo contact the editors responsible for this story: Carolina Wilson at firstname.lastname@example.org, Alec D.B. McCabe, Robert JamesonFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Russia’s largest oil company has already completed the switch away from the U.S. dollar in an effort to minimize its exposure to U.S. sanctions
VERONA/MOSCOW (Reuters) - Russia's largest oil company Rosneft has fully switched the currency of its contracts to euros from U.S. dollars in a move to shield its transactions from U.S. sanctions, its Chief Executive Igor Sechin said on Thursday. Rosneft's switch to the euro is seen as part of Russia's wider-scale drive to reduce dependence on the dollar, but it is unlikely to quickly boost the euro's role for Russia given the negative interest rates it carries.
NEW DELHI/MEXICO CITY (Reuters) - India's Nayara Energy has been using Russian giant Rosneft as an intermediary to acquire Venezuelan oil, paying it in fuel rather than cash to avoid violating U.S. sanctions, three sources with knowledge of the transactions said. The United States in January prohibited U.S.-dollar transactions for oil sales from Venezuela's PDVSA or its units, a measure intended to cut off cash flows and increase pressure on President Nicolas Maduro, whose 2018 re-election has been dismissed as a sham by Washington. The sanctions have made some banks wary of processing any transaction for Venezuelan oil, even if the seller is not the state-run company.
Venezuela's oil exports ticked up in September from the previous month, but not enough to reduce high inventories that have forced the country to pare its output, according to Refinitiv Eikon and PDVSA internal data. Fewer buyers have been taking Venezuelan crude amid U.S. efforts to oust socialist President Nicolas Maduro. In August, the United States expanded its efforts to punish non-U.S. firms "materially assisting" Maduro.
Shareholders in the Sakhalin-1 oil and gas project in Russia's far east have decided to build their own liquefied natural gas (LNG) plant in the Pacific port of De Kastri, which could supply the super-cooled gas to Japan, Rosneft's chief executive said. The four companies - Rosneft, Exxon, Japan's SODECO and India's ONGC Videsh - are partners in the Sakhalin-1 group of fields. The partners were considering whether to build their own LNG plant or to sell gas to Gazprom.
Russian state oil major Rosneft has become the main trader of Venezuelan crude, shipping oil to buyers in China and India and helping Caracas offset the loss of traditional dealers who are avoiding it for fear of breaching U.S. sanctions. Trading sources and Refinitiv Eikon data showed Rosneft became the biggest buyer of Venezuelan crude in July and the first half of August. It took 40% of state oil company PDVSA's exports in July and 66% so far in August, according to the firm's export programs and the Refinitiv Eikon data, double the purchases before sanctions.
Russia's Rosneft, one of the world's top oil producers and exporters, has notified customers that future tender contracts for oil products will be denominated in euros not dollars, five trading sources told Reuters. Rosneft, which accounts for over 40% of oil output in Russia, produced 45.8 million tonnes of oil products at home in the first six months of this year - from diesel and gasoline to fuel oil and petrochemicals. The bulk of oil products for export are sold at tenders: Rosneft holds annual tenders as well as a number of spot or short-term tenders, with BP, Glencore, Trafigura, Vitol and Cetracore among top buyers.
Foreign joint venture partners with Venezuelan state-owned oil company PDVSA are concerned the latest set of U.S. sanctions on the South American country could disrupt their operations, three industry sources said. The Trump administration last week froze all Venezuelan government assets in the United States and U.S. officials ratcheted up threats against companies that do business with Venezuela. The White House imposed sanctions on Venezuela's oil industry in January in an effort to oust socialist President Nicolas Maduro, whose re-election in 2018 is viewed by much of the Western Hemisphere as illegitimate.