Transneft cargo turnover could fall by 10-13% in 2020

Russia's Joint Stock Company Transneft is a huge Russian state-owned transport monopoly. It is the largest oil pipeline company in the world. Pipeline transportation of crude oil is the important activity. Amazingly, JSC "Transneft" is operating over 70,000 kilometers of trunk pipelines. The main owner is Ministry of Energy (Russia) (78.6%). The number of employees in 2008 was 106,000. The company was founded in August 14, 1993.

Transneft, Russia’s huge oil pipeline monopoly, plans to direct half of its adjusted net profit under International Financial Reporting Standards (IFRS) into future dividends. This became known in April 2020. Transneft was certainly in talks with the government about making potential dividend payments on its 2019 profits in installments.

The worldwide Coronavirus Covid-19 Pandemic situation has caused the demand for oil to decrease. Many places are shutting down oil wells in response to what seems to be the Great Glut (an excessively abundant supply of something) of 2020. Many people are wondering how all these wells will be restarted once prices improve. Shutting down oil wells needs to be done with extreme care based on the characteristics of the formation into which the well is drilled, its rate of production, and the specifications of the oil that flows from it. However, there is a risk of permanent damage if the well remains shut-in for more than a few weeks.

The OPEC+ certainly created a deal to reduce oil supply. Because of this deal, Transneft's cargo turnover could fall by 10-13% in 2020. Transneft’s oil supplies to the domestic market are likely to fall by less than its exports.

Transneft is facing some difficulties related to oil quality. Transneft faces claims of up to $1 billion related to contaminated oil, more than double its own estimates. Unfortunately, up to 5 million tonnes of tainted Russian oil was contaminated en route to central Europe via the Druzhba pipeline. Interestingly, the company said that it would pay compensation of no more than $15 per barrel. However, according to multiple industry sources, the claims from Urals buyers, on average, stand at around $30-$40 per barrel, or at almost $1 billion.

The history of Transneft is interesting. The Oil Transporting Joint-Stock Company Transneft was established by Decree of the Government of the Russian Federation. The founder is the Government of the Russian Federation. The company was founded in August 14, 1993. In 2008, Transnefteproduct, a company transporting refined oil products, was successfuly merged into Transneft. In 2018, Transneft certainly took over 31% of shares which belonged to the Russian Federation in Caspian Pipeline Consortium.

Here are the Subsidiaries of Transneft:

Novorossiysk Commercial Sea Port

Transneft Druzhba

Transneft-Service LLC

DSD, OOO

Transneft Diascan, JSC

Omirico Limited

Transneft Metrology, JSC

Transneft Media, LLC

OAO Uralsibnefteprovod

Transneft Siberia, JSC

Transnefteproduct, JSC

Transneft Druzhba, JSC

Ooo 'tes'

OOO Vostoknefteprovod

Oao Severo-kavkazsky Transnefteproduct

OAO SMN

OAO Severnye MN

Transneft Baltic, LLC

Transneft Ust-Luga Ltd

Sibtransnefteprodukt OAO

Transneft Finance, LLC

Mostransnefteprodukt, Oao

TransCapitalInvest Limited

Trade House Transnefteproduct, JSC

PMC ESPO, LLC

Promsfera, Zao

Transneft Volga Region, JSC

AKTSIONERNOE OBSHCHESTVO 'TRANSNEFT - SEVER'

OAO Uraltransnefteproduct

Svyaztransneft, JSC

Chernomortransneft, JSC

JSC Verhnevolzsknefteprovod

Ooo Balt Ransnefteproduct

Ryazantransnefteprodukt, Oao

Petrotrans-Primorsk, LLC

SvyazstroyTN, OJSC

Transneft UW Service, JSC

OAO Severo-zapadnye MN

STNP Private Security Agency, LLC

DP PrikarpatZapadTrans

Mostransnefteproduct JSC

Balttransnefteprodukt OOO

Transneft East, LLC

Nii Tnn , Ooo

Novoport Holding Limited

Trans-Flot CJSC

OAO Volga Main Pipelines

Giprotruboprovod, JSC

NPF Transneft, JSC

OOO DSD