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Gazprom PJSC showed its eagerness to give shareholders bigger dividends as a long period of big spending comes to an end. The state-controlled Russian natural gas giant. which has long faced calls for higher payouts from both the government and investors. will take a more generous interpretation of its dividend rules for 2019. It’s a sign of how the company’s priorities are shifting after executive reshuffles and the completion of investments in major pipeline projects around the world. Just two months ago. Gazprom approved a new policy to pay out at least 30% of 2019 adjusted net income to shareholders. But the final payout may be higher than that policy requires. said deputy chief executive officer Famil Sadygov. “Taking into account the interests of our shareholders. Gazprom’s management may make a landmark decision.“ Sadygov said in an interview. “In the first year of our shift to the new dividend policy“ the company may bolster funds available for payouts by deciding that customary non-cash adjustments to net income “will be applied only partially or will not be applied at all.“ Shares of the company in Moscow rose 3.9% to 233.9 roubles. the biggest increase since July. Gazprom’s spending commitments have fallen since it started gas flows to China via the Power of Siberia pipeline at the end of 2019 and officially opened the TurkStream link last month. The group’s 2019 net income. which also includes oil producer Gazprom Neft PJSC and a number of power plants. exceeded $21bn. Sadygov said. citing preliminary estimates. The group’s revenue was likely about $126bn in 2019. according to the company’s presentation. The new policy for 2019 dividends envisions adjustments for five non-cash items. which include foreign-exchange differentials and a range of impairments. Payouts will rise to at least 40% of adjusted net income for 2020 and at least 50% starting in 2021. Dividend payouts from Gazprom’s subsidiaries will be at least 50% for 2019 results. according to Sadygov. Gazprom’s management will decide on the level of adjustments in April. Sadygov told investors on Tuesday. Even as Gazprom’s spending requirements wane. the company is still experiencing several headwinds including a warm winter. which reduced exports to Europe and Turkey. It also faces increased competition from liquefied natural gas. which pushed prices for the fuel lower. While Gazprom passed the “stress test“ of market conditions in 2019 “rather decently.“ lower spot prices for gas will continue to affect its business in 2020. Sadygov said. “We assume that our key financial indicators may be below 2019 levels.“ he said. adding that it’s premature to draw conclusions based on January results. To mitigate potential market risks. Gazprom has set aside 676.5bn roubles ($10.7bn) in its budget for this year. according to the deputy CEO. It has also reduced its 2020 investment program by almost 20% from last year to 1.08tn roubles. he said.
