Novatek Hit by Forex, LNG Prices, Volumes in 2020

Russian independent Novatek recognised "substantial foreign exchange effects on foreign currency denominated loans" each quarter of a year already hit by lower demand and energy prices, it said February 17.

Nevertheless the company said it achieved strong operating results with a rise in gas output and it implemented its main investment projects in line with the corporate strategy.

Total revenues and normalised pre-tax earnings (Ebitda), including from its joint ventures, amounted to roubles 711.8 ($9.6)bn and roubles 392.0bn, respectively, representing year on year decreases of 17.5% and 15.0%.

LNG sales were hit by lower prices and volumes: the year before, Novatek sold LNG on its own account before the Yamal LNG long-term contracts began. The trains started up ahead of time, giving the operator rights to sell output independently of the joint venture.

It exported 8.9bn m³ as LNG, compared with 12.9bn m³ in 2019. Total sales were 75.6bn m³, down from 78.5bn m³ in 2019.

Novatek distributed roubles 67.8bn in profit to shareholders, down from roubles 865.5bn in 2019. The latter figure was inflated by a gain of roubles 675.0bn from the sale of a 40% stake in the Arctic LNG 2 project in 2019. Novatek also recognised in 2019 and 2020 losses on these sales totalling a little over roubles 80bn. After allowing for these one-off items, the reduction was only 31% on 2019.

Gas production including its proportionate share in the production of joint ventures rose 3.6% to 77.36bn m³ as compared to 2019. The launch of fields within the North-Russkiy cluster, the East-Tazovskoye and Dorogovskoye fields and improved output from Arcticgas’s Urengoyskoye field all contributed. Novatek also sold more gas on the domestic market with the launch of additional production facilities.

Liquid hydrocarbons sales volumes – the company also produces gas condensates – totalled 16.4mn metric tons, representing a marginal increase of 0.2% on 2019.