Novatek estimates 50% boost in profits in 2022
Russia's Novatek increased its net profit by 50% in 2022, in spite of difficulties caused by Western sanctions and the broader impact of the war in Ukraine, company CEO Leonid Mikhelson said at a conference in India on February 6.
Novatek's net income under international financial reporting standards (IFRS) came to 433bn rubles ($6.1bn) in 2021, up from 422bn rubles in the previous year.
Like other Russian oil and gas companies, Novatek has suffered headwinds from the introduction of Western sanctions in response to Moscow's invasion of Ukraine. But while other producers have had to cut exports, Novatek's have been resilient over the past year. Its gas production increased by 2.8% in 2022 to 82.1bn m3, and output is expected to remain at the same level this year, Mikhelson said.
"For this year, the business plan will most likely be adjusted," Mikhelson was quoted as saying by Russian media at a conference in India, noting that further Western sanctions could be introduced. "What is very important to note is that we have no problems with selling all the products that we produce."
Russian oil and pipeline gas supplies to Europe have dropped over the past year as a result of Gazprom cutting off deliveries to a number of gas customers and oil buyers shunning the country's products. A seaborne Russian oil embargo that the EU introduced in early December is causing crude deliveries to fall further.
Russian LNG supplies to Europe actually grew last year, however, although some EU governments including that of Germany are reportedly considering measures to curtail these volumes.
Novatek stopped fully disclosing its financial data after the conflict in Ukraine began, and Mikhelson said he did not expect full disclosure to resume yet.
The CEO reiterated that Novatek still expects the first train of the Arctic LNG-2 terminal to come online this year as planned, despite sanctions and a number of Western contractors, suppliers, financiers and other companies withdrawing from the project.
"We officially confirmed when we made the investment decision. We plan the commissioning of the first train in 2023, the second in 2024 and the third in 2026," Mikhelson said. "Today we keep the commissioning deadlines."
He added that Novatek had found a solution for providing electricity to Arctic LNG-2's facilities. Baker Hughes had been enlisted to provide power turbines, but cancelled the supply in light of the war in Ukraine.
"We have found the necessary power generation – both the first and second trains are fully provided with the necessary capacities for power generation," Mikhelson said, without disclosing what power solution had been found.
Previously Russian media reported that Turkey's Karpowership had been in talks to provide a floating power plant for the project. But Mikhelson said those discussions had ended "a long time ago because they changed the conditions for providing this power plant every month."
"They can't work with Novatek like this," he said.