Gazprom’s financial strategy ensuring Company’s steadiness under negative global market trends
The Gazprom Board of Directors took note of the information on the Company's financial strategy under the conditions of negative trends in the global financial market for the Russian business entities.
It was pointed out that the geopolitical events involving Ukraine as well as American & EU sanctions imposed on Russia affected many Russian companies.
In this context Gazprom thinks it is necessary to adhere to the current financial strategy, which provides for the Company's good standing and enables it to swiftly react to the possible aggravation of the situation.
Gazprom's financial strategy envisages several basic lines of the Company's business.
One of them is forming Gazprom's conservative budget allowing for the risks of reducing the volumes of gas withdrawal by contractors or not receiving their payments for the provided supplies. Based on such a scenario Gazprom shapes the kind of a cash budget, which demands the most efficient use of funds intended for the Company's top-priority projects, as well as enables the Company to fulfill all its obligations for repaying loans and fully finance the operational costs.
When shaping up the investment program, Gazprom defines the top-priority projects and rates them by their significance and feasibility. In this context the Company adheres to project financing mostly through its own funds. Such an approach restricts the unfounded growth in capital expenditures stipulated in the investment program, giving an opportunity to deliver Gazprom's principal projects.
Gazprom proceeds with improving centralized liquidity management system of Group and managing financial risks.
Gazprom stays conservative while dealing with debt management issues within its financial strategy. Its implementation had already provided for an optimum debt structure and the Company's good standing by the moment the environment in the global financial markets turned to be unfavorable for the Russian companies.
Thus, following the results of H1 2014, the net debt/EBITDA ratio totaled 0.5, reaching the level of the global energy companies and allowing the Company to fully pay off its debt using the funds earned just over six months. A share of long-term debts has considerably increased – currently the debts payable in or above five years make up about one third of the Company's debt structure. In addition, a share of fixed-rate debts exceeds 95 per cent of the Gazprom Group total debt, considerably reducing under the current market conditions the risks related to rate fluctuation.
Presently Gazprom considers the opportunity of diversifying the sources of financing through the Asian capital markets. The Company cooperates with Asian financial institutions on a number of issues, including the possible denomination of Eurobonds in Asian currencies.
The measures to sustain the capitalization and enhance the liquidity of Gazprom's shares are in progress. Last June Gazprom's global depositary receipts were listed in the Singapore Exchange quotations. Listing at the Hong Kong Exchange and getting a higher level at the Singapore Exchange are currently being considered. Listing at Asian exchanges gives access to new investors, including pension funds, insurance companies, Asian corporations, family foundations and managing companies of Asian banks.