(EnergyAsia, February 13 2015, Friday) — With its large cash hoard of over US$90 billion, most of in US dollars, the Russian oil industry is not in imminent danger of financial collapse and will be able to operate without external funding at the current oil price level for at least a year, said Goldman Sachs.
According to a ZeroHedge report, the Wall Street bank estimates that Russian oil companies have accumulated as much as US$64 billion in surplus and another US$26 billion to meet short-term and on-going operations. The sector has debt payments of US$40 billion due throughout this year that Goldman Sachs said will be fully covered by earnings.
As a bonus, the companies expect to generate at least US$13 billion in cashflow for 2015 if their budgets and dividends are left intact. However, this is looking increasingly difficult to defend in the face of falling oil and gas prices.
Assuming an oil price of US$60 to US$70 per barrel and an exchange rate of 60 rubles to the US dollar, Goldman said the Russian industry “should be able to maintain 2015 capex, dividends, and debt payments even without refinancing.”
With Brent averaging less than US$50 per barrel in January amid fears oil prices could fall further, Goldman may have to revisit its conclusion later in the year.
If conditions deteriorate, the industry can always look to Moscow for funding.