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    Gazprom Posts Q1 Loss on Weaker Prices, Ruble


The coronavirus took its toll on European gas demand, but Gazprom was already contending with weaker sales before lockdowns were imposed.

by: Joseph Murphy

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Gazprom Posts Q1 Loss on Weaker Prices, Ruble

Russia's Gazprom posted a net loss of rubles 116bn ($1.64bn) for the first quarter, versus a net income of rubles 536bn in the same period last year, it said on July 14, blaming the result on oil price-related impairments and ruble devaluation. It had to repay customers rubles 3.76bn in Q1 retrospective price adjustments, compared with zero the previous year.

There was also a slump in demand owing to a very mild winter, well-stocked storage facilities and a weaker global economy. The state gas supplier also saw its profit on sales slump to rubles 293.5bn, from rubles 459bn in the same period last year. Net sales to its highest-value market, Europe, net of taxes and duty, plunged to rubles 459.5bn, from rubles 837.4bn.

European gas demand took a hit in March as a result of travel restrictions and other measures coming into force to slow the spread of the coronavirus (Covid-19) pandemic. Gazprom has also ceded some market share this year to new suppliers of LNG, notably from the US. 

Gazprom sold 51.6bn m3 of gas to Europe and other countries outside the former Soviet Union in the first quarter, down 17% year on year, while average dollar denominated prices tumbled 37% to rubles 10,800 ($152)/'ooo m³. Total sales were 138.1bn m³, down from 158.9bn m³ the year before. 

Net sales of gas to former Soviet Union (excluding Russia) dropped by rubles 30.378bn, or 26%, to rubles 87.119bn. The change was mainly due a 24% reduction in the volume sold (2.9bn m³ less), and a 12% reduction in the ruble-denominated average price, including customs duties. The Russian Federation took 8% lesss gas, at 77.2bn m³, and earnings fell or 7% to rubles 322.765bn.