Gazprom Loses First Place in Ranking of Largest Energy Companies

Gazprom lost its first place in the authoritative world ranking of energy companies S&P Global Platts, falling 15 places at once. The 2018 ranking was topped by ExxonMobil, and Russia's Lukoil took second place.

Details

• According to 2018 data, Gazprom dropped from 1st to 17th position in the authoritative S&P Global Platts rating . The leadership was returned to the American ExxonMobil, which last year lost the first place to a Russian company for the first time in 12 years. As the rating agency notes, the change in the leader occurred against the backdrop of a recovery in oil prices and hopes for an export boom in American LNG. When compiling the rating, S&P Global Platts took into account the value of assets, revenue, profit and return on invested capital.
• Even good reporting for the first half of the year did not help Gazprom maintain its leadership: the company's net profit grew by 65%. Gazprom shares have grown by 15.3% since the beginning of the year.
• Second place after ExxonMobil in the ranking was taken by Russia's Lukoil (moving up from 6th to 2nd place). It is followed by the American Phillips 66, the German E.On and the Chinese China Shenhua Energy Co Ltd. The report specifically highlights Lukoil's success: "In its annual report to shareholders for 2017, Russia's Lukoil... spoke about spending on new technologies that open up opportunities for the company to increase production and reserves. The company's CEO Vagit Alekperov noted success in each of the business segments, pointing out that financial indicators have reached a "historic peak."
• In addition to Lukoil, Surgutneftegaz (moved up from 165th to 35th place) and Bashneft (from 75th to 72nd) improved their positions in the rating. In addition to Gazprom, the ratings of Transneft (dropped from 14th to 30th place), Rosneft (from 22nd to 36th), Tatneft (from 46th to 54th) and Novatek (from 44th to 60th) also fell.
• The rating also included Rosseti (it retained 56th position) and Inter RAO (it fell from 68th to 87th place).

Context

• Despite good reporting and rising stock prices, in September 2018, Gazprom for the first time in history lost market capitalization to its only competitor in Russia, Novatek, which has launched major projects in recent years, led by Yamal LNG, while Gazprom is investing in costly projects like Nord Stream 2, which were implemented largely for political reasons. Yesterday, Germany's Sueddeutsche Zeitung reported that Vladimir Putin said during talks with Angela Merkel that the Russian side is ready to finance the construction of the gas pipeline alone if European participants face sanctions for participating in the project. Previous agreements envisaged 50% Russian financing, 50% European.
• Sberbank CIB analysts led by Alex Fak wrote that Gazprom's projects are not being implemented for commercial reasons. Commenting on Gazprom's construction projects of the century - meaning Power of Siberia, Nord Stream 2 and Turkish Stream - the experts wrote : "We find that Gazprom's decisions become absolutely clear if we assume that the company is managed in the interests of its contractors, and not for commercial gain." The main contractors at Gazprom's construction projects are the companies of Arkady Rotenberg and Gennady Timchenko.

Liana Faizova