Gazprom Stung by Weak Prices, Lower Volumes in 2019
Net profits at Gazprom dipped 17% to rubles 1.2 trillion ($17.2bn) in 2019, the Russian state-controlled company reported on April 29, as a result of lower gas prices and decreased sales in its most profitable region: Europe.
The Russian gas producer's revenues declined 6.8% to rubles 7.66 trillion. Revenues in non-CIS countries were down 15.6% at rubles 2.49 trillion, on the back of a 4.5% slide in volumes to 232.4bn m3 and a 12% fall in the average price to rubles 13,613 ($185)/'000 m3. This was partly offset by modest increases in gas sales revenues in Russia and other CIS states.
Gazprom faced pressure in Europe from increased competition from LNG suppliers last year, which is growing this year. Other factors affecting its business were high storage levels, lower oil prices, which many of its contracts are indexed to and warmer weather. It also suffered declines in supply volumes in key markets such as Turkey, Germany and the UK.
The company is set for a tougher year in 2020, as a result of the demand destruction in Europe caused by Covid-19 lockdowns. It is also required to pay $1.5bn in compensation to Poland's PGNiG for overcharging for gas since 2014, under a Stockholm arbitration award. Poland is threatening further legal action if Gazprom does not comply with the award. The company has not responded to a request to comment on the case.