Novatek’s profit dips on low oil and gas prices

Russia’s independent LNG producer Novatek reported a sharp decline in its net profit last year due to lower oil and gas prices.

Novatek said its net profit reached 67.8 billion roubles ($916.6 million) in 2020, compared to 865.5 billion roubles it logged in the year before.

Excluding effects such as the share sale of its Arctic 2 LNG project in 2019 and foreign-exchange fluctuations, net profit dropped 31 percent to 169 billion roubles, according to Novatek.

Revenues also dropped 17.5 percent to 711.8 billion roubles ($9.62 billion).

The LNG producer said its results were “significantly impacted by the unfavorable macroeconomic environment” as the Covid-19 pandemic destroyed demand all over the globe pushing prices down to record lows.

Revenues also dropped due to lower LNG sales on international markets.

Novatek reported last month it sold 8.93 bcm of LNG on international markets, a drop of 30.2 percent when compared to the year before.

The company attributed the decline to lower spot market sales from its Yamal LNG export terminal in the Russian Arctic.

The drop was due to the decrease of Yamal LNG shareholders’ share, including Novatek’s share, of volumes sold on the spot market, and a corresponding increase of Yamal direct sales under long-term contracts, it said.

However, the company also confirmed its natural gas and overall production of hydrocarbons has increased.

Novatek said its 2020 natural gas production increased by 3.6 percent year-on-year to 77.37 billion cubic metres.

The company’s total production of hydrocarbons rose by 3.1 percent to 608.2 million barrels of oil equivalent.

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