Russian oil company Tatneft may have to delay dividend payout

RUSSIA / FSU POLITICS - In Brief 22 Apr 2020 by Alex Teddy
Tatneft has dropped its plan to buy out shareholders. On April 22 the board of Tatneft advised cancelling its planned payout of fourth quarter dividend that was due in June. The company is desperate to keep money in its accounts so it can get through this downturn. Tatneft is the 5th biggest oil company in Russia. The company's main shareholders is the Republic of Tatarstan. Many fear that other oil and gas companies may suffer as much Tatneft. Rosneft, Transneft, Gazprom and Gazprom Neft are in similar predicament. VTB speculates that other oil companies may delay paying out dividends from 2019 profits. That might the only way to maintain cashflow. Shares in Tatneft have halved in value by 50% since the start of 2020. That is because oil prices are down by 70% in the same period. Even if a company pumps no oil its facilities have to be inspected and maintained and skilled engineers paid otherwise they will find other jobs. This costs money.In January the oil and gas sector was bullish. The government demanded a bumper divided payout to boost tax revenue.The oil and gas sector is due to take a hit of at least USD 9.8 billion according to VTB Capital. OPEC+ has mandated a 2.5 million barrel per day production in an effort to raise the price of oil. On April 22 Russian Urals oil is now at its lowest price since 1998 in the Mediterranean: USD 10 per barrel. In the US and other other countries oil storage facilities are full. In the US it costs more to produce a barrel of West Texas Intermediate than it will sell for. The stock market has been egregiously turbulent.Just when it seemed that it could not get worse for the oil industry it did.

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