Insight
The challenges of financing Russia's upstream
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*Please note that this report only includes an Excel data file if this is indicated in "What's included" below
Report summary
As of Q1 2016, Russian upstream players have accumulated around US$140 billion of long-term debt. In the last two years, EU/US sanctions have prohibited access to Western long-term debt markets to certain operators. This pushed Russian upstream companies to find alternative ways of financing. Relying on domestic and Asian banks, oil supply prepayments, and REPO loans, operators have diversified their sources of funding and kept increasing liquids production. However, not having access to cheap Western capital and facing higher premiums, Russian companies face a difficult choice between increasing their interest burden, selling assets, or delaying some investment programmes which could make sustaining the current levels of output challenging in the long term.
Table of contents
- Executive summary
- Financial sanctions
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Less bonds, more alternatives
- Different strategy for each player
- Prepayments and asset sales help Rosneft
- Moving towards Chinese and domestic financing
- Higher interest burden to negatively impact profitability
Tables and charts
This report includes the following images and tables:
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Who is targeted?Spread - Russian government 10-year bonds vs. 10-year US TreasuriesThe challenges of financing Russia's upstream: Image 4
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The challenges of financing Russia's upstream: Image 5Gearing evolution since 2013Upstream cash flow forecast until 2020 (nominal terms)Long-term debt outstanding per company (Yamal LNG not included)Long-term debt outstanding per asset class (Yamal LNG not included)
What's included
This report contains:
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