LNG

Novatek, the Russian natural gas company and operator of Yamal LNG and the developer of the Arctic LNG II project, reported a more than six-fold rise in annual net profits as global prices soared and storage levels dropped.

The Moscow-based company posted 432.9 billion Russian roubles ($5.7 billion) of profits attributable to shareholders compared with 67.8Bln roubles ($893 million) of profits in the previous year.

Novatek is the largest independent natural gas producer in Russia and started up the Yamal LNG export plant in northern Siberia in 2017 to supply Europe and Asia and is currently building the second LNG joint venture on the Gydan Peninsula.

The company, listed on the Moscow and London stock exchanges, said total revenues and normalized gross income, including its share of joint ventures, amounted to 1,156.7 billion roubles ($15.23Bln) and 748.3Bln roubles ($9.85Bln), representing increases of 62.5 percent and 90.9 percent respectively compared with 2020.

Its upstream activities are concentrated in joint ventures in the prolific Yamal-Nenets Region, the world’s largest natural gas producing area, accounting for about 80 percent of Russia’s gas production and around 15 percent of the world’s gas output.

Price rises

“The increases in total revenues and normalized EBITDA were largely due to an increase in global commodity prices for hydrocarbons, as well as the launch of gas condensate deposits within the fields of the North-Russkiy cluster,” said Novatek.

The company explained that European and Asian natural gas markets were impacted by faster than expected recovery of demand after the Covid-19 pandemic, the declared energy transition policy, as well as weather factors and supply disruptions.

“All this caused storage level reductions in key consuming regions and a strong price rally in the second half of 2021,” it added.

Novatek’s natural gas sales volumes totaled 75.8 billion cubic metres, representing a marginal increase of 0.3 percent compared with 2020, though global prices soared.

“An increase in natural gas volumes sold on the domestic market completely offset a decline in natural gas volumes sold on the international markets,” explained the company.

“The increase in natural gas volumes sold on the domestic market resulted from the launch of additional production facilities, as well as higher demand from end-customers due to weather conditions,” added Novatek.

“The decline in natural gas volumes sold on the international markets was due to a decrease in LNG sales volumes purchased primarily from our joint venture OAO Yamal LNG, as a result of an increase in the share of Yamal LNG’s direct LNG sales under long-term contracts and the corresponding decrease in LNG spot sales to shareholders, including the Group,” it stated.

The Moscow-based company produces and sells LNG, crude oil, domestic natural gas, liquefied petroleum gas and other petroleum products.

Novatek’s total hydrocarbon production increased to 626.3 million barrels of oil equivalent from 608.2 million boe in the previous year.

Total production amounted to 1.72 million boe per day versus 1.66M boe per day in 2020.