Russian Novatek Profits Hit By Forex

Russia's second LNG export project, Yamal LNG, boosted first-quarter earnings for its operator and majority shareholder, the privately-held Novatek. But foreign currency-denominated loans turned what should have been a 5.8% year on year rise in earnings into a big decrease relative to the same period last year, it said as it announced its results April 25.

The first LNG cargo left Yamal as planned at the end of Q4, 2017, and that and successive deliveries, and higher oil and gas prices, contributed to revenues of rubles 179.4bn ($2.9bn) and normalised earnings before tax, interest, depreciation and amortisation (Ebitda), including its share of Ebitda in joint ventures, totalled rubles 76.3bn, representing year-on-year increases of 16.0% and 11.9%, respectively. 

But profits in both reporting periods were significantly impacted by the recognition of substantial non-cash foreign exchange effects on foreign currency denominated loans, so the actual profit attributable to shareholders fell to rubles 43.1bn, or by 39.3%, as compared to the corresponding period in 2017.

(Novatek)

Gas sales on international markets were up by 958mn m³, thanks to the first LNG train at Yamal LNG. Gas output as a whole was up, thanks to the start of train 1 of Yamal LNG and the purchase of new producing fields at the end of 2017 and in the first quarter of 2018: Beregovoye, West-Yaroyakhinskoye and  Syskonsyninskoye. As a result, our total natural gas production increased by 2.2%, and our total liquids production declined marginally by 1.0%.

Gas sales  were at 20.3bn m³, representing an 8.1% increase on the same period last year, again owing to the start of LNG exports and an increase in volumes sold in the Russian Federation.

(Novatek)