June 6, 2019 / 7:48 AM / a month ago

UPDATE 1-Russia's Gazprom Neft sees dividend on 2019 profits no less than 2018

(Updates to add context, quotes)

By Olesya Astakhova and Katya Golubkova

ST PETERSBURG, Russia, June 6 (Reuters) - Russia’s Gazprom Neft, the oil arm of state gas company Gazprom , plans for its dividend payout based on 2019 results to be no less than the previous year, a senior company executive told Reuters.

Gazprom Neft may even increase the dividend it pays out relative to net profit, Alexei Yankevich, deputy chief executive for economics and finance, said in an interview.

The company, Russia’s third biggest oil producer by output, said earlier it planned to pay 37.8% of its 2018 net profit in dividends, above a 35% target.

“Our strategy and tactics in general are a gradual increase in dividends,” Yankevich said. Dividends on this year’s results will be announced and paid in 2020.

“We don’t want any sharp fluctuations in our dividends per share, we want a gradual but stable increase,” Yankevich said.

He added that the company’s net debt is expected to be roughly flat at 528 billion roubles ($8 billion) for the next three years, with Gazprom Neft remaining an active borrower on the domestic rouble bond market, while also using other public and non-public debt raising options.

Gazprom Neft is under Western sanctions which limit its ability to raise funding on Western markets. Yankevich said that Gazprom Neft’s key lenders at home are the state banks Sberbank and VTB, as well as Gazprombank where its parent company Gazprom is a shareholder.

Gazprom Neft needs to refinance around $1 billion of debt in total this year - a figure which includes all currencies - as well as a lesser amount next year, Yankevich said.

The company’s investments are seen at around 380 billion roubles ($5.8 billion) over the next 2-3 years, as it aims to continue investments into its downstream and upstream assets. (Editing by Maria Kiselyova and Elaine Hardcastle)

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