Eurobond issue crucial for Naftogaz strategy implementation – head of supervisory board
The main source of financing for the business strategy of the Naftogaz Group until 2025 is its own funds, but the issue of eurobonds is also extremely important for its implementation, Head of the supervisory board of NJSC Naftogaz Ukrainy Clare Spottiswoode has said.
"The issue of eurobonds is critical for the implementation of the strategy. Which means that conditions are also needed that will allow investors to make a decision to invest in our company," she said in an interview with Interfax-Ukraine.
According to her, the success of the eurobond issue depends on political stability in Ukraine and on the confidence of investors that the government will allow Naftogaz to raise funds and redeem these bonds.
The head of the supervisory board also expressed the hope that the government will keep part of the company's profits for the implementation of the strategy. "Of course, we have alternative plans in case we cannot keep some of the profit for investment. And if we cannot issue bonds [...], then it is obvious that it is impossible to invest money that we do not have," Spottiswoode said.
She added that if the government decides to leave the gas price cap for households, it must realize that such a decision will halt the development of Naftogaz and destroy investment opportunities.
The head of the supervisory board said that the supervisory board has already approved the strategy and its members have joined the work on it at various stages. "We fully support this strategy, consider it very important for Naftogaz and strongly encourage its implementation," Spottiswoode said.
She noted that the strategy is a dynamic document. "For example, we have made a commitment to achieve carbon neutrality by 2040. But we do not yet know what the path will be. There is part of this vision, but over the next few years, much will change, and the path to the goal will also change," the head of the supervisory board said.
According to her, Naftogaz is still working hard on plans in the field of "green" energy, in particular, it is determined which areas are expedient for the group, and which are better left to other companies.
"For example, it is not known if we seriously move towards solar energy. We can, but this is not a 100% task, because there are other, more suitable investors. Solar energy is not one of our strengths. But hydrogen – on the contrary," Spottiswoode said.
She added that Ukraine also has a powerful agro-industrial complex with a large amount of agricultural waste that can be used to produce biogas. "And this is already our main specialization," Spottiswoode said, stressing that there is no point in investing in something that is not profitable.
As reported, the Naftogaz management presented the group's business strategy until 2025 in mid-February. Among other things, it involves the return of the company to the position of the largest player in the wholesale natural gas market of Ukraine, an increase in its share in the market for gas supplies to household consumers from 7% to 35%, and entry into the electricity and heat markets.
In addition, Naftogaz plans to invest $7.3 billion in hydrocarbon production in 2021-2025, increasing its reserves by 1.8 times.