KazTransOil approved a new export tariff and transit tariff for TON-2

Halyk Finance ResearchFebruary 28, 2018

KazTransOil approved a new export tariff (T6398.92/tonne * 1000km) and the tariff for oil pumping for transit via the Kazakh section of the main pipeline Tuymazy-Omsk-Novosibirsk-2 (T4292.4/ton * 1000km).

According to a press release issued yesterday, KazTransOil approved a new export tariff (effective April 1, 2018), which amounted to T6398.92 / tonne * 1000km. The tariff for oil pumping for transit via the Kazakh section of the main pipeline Tuymazy-Omsk-Novosibirsk-2 (TON-2) amounted T4292.4 / ton * 1000km.

The current tariff for oil pumping for export outside the Kazakhstan is T5817.2 / tonne * 1000 km.

The current tariff for oil pumping for transit through the territory of Kazakhstan on the Kazakh section of the main pipeline TON-2 (TON-2) is T1727.1 / ton * 1000 km.

Our view

The new export tariff of KTO exceeds the current tariff by 10%. The new tariff for TON-2 implies an increase in the current level by 2.5 times.

In turn, the tariff levels we set in our model are lower than the new export tariffs by 8% and transit TON-2 by 57%. It should be noted that the income received from transit in the direction of TON-2 in 2016, amounted to less than 10% of total revenue.

The increase in tariffs is definitely positive for the value of shares in the long term. Meanwhile, dividend expectations, depending on the results of 2017, today are the main driver of growth in the shares of KTO. We maintain our Buy recommendation for KTO shares with 12M TP of T6182/share.