Gazprom reports record profits | Financial Times


Gazprom has reported record profits for the first nine months of the year on the back of soaring gas prices, which the Russian state gas giant expects to boost performance even further in the final quarter.

Famil Sadygov, deputy chair, said on Monday that earnings of Rbs1.55tn ($20bn) in the nine months to the end of September were “already higher than in any full calendar year in the company’s history”.

“Given the current dynamics, we expect even more impressive results in the fourth quarter,” he added.

Gazprom, which holds a monopoly on Russia’s pipeline gas exports, has benefited from a surge in gas prices in Europe, its main export market. It has been fulfilling its contract obligations but with no additional spot sales, helping sustain high prices caused by factors including redirected global gas supplies to Asia.

Gas prices have risen for six consecutive quarters. Third-quarter prices nearly tripled year on year to $304 per 1,000 cubic metres, according to Gazprom, helping it recover from last year’s losses.

Revenues from overall gas sales in the first nine months rose 77 per cent from the same period in 2020 to Rbs3.5tn. Sales to Europe and Turkey rose 117 per cent to Rbs2.5tn.

Prices have surged much higher since then, promising bumper earnings in the coming months.

“We expect significant further price increases in the fourth quarter of 2021 and the first quarter of 2022 as Gazprom’s price catches up to market prices after a typical delay,” said Ron Smith, senior analyst at BCS.

European gas prices were on the march again on Monday as a cold snap gripped the continent.

Gas futures linked to TTF, Europe’s wholesale gas price, were up 7.6 per cent at €95.25 per megawatt hour. They reached a record of nearly €118 in October, having started the year below €20.

As temperatures dropped over the weekend, analysts said the pace of withdrawals from storage in Europe had accelerated to 2.5bn cu m, up from 1.8bn cu m the week before.

“European gas storage utilisation was down to 71 per cent or 71 bcm as of 24 November,” said analysts at UBS. “It remains well below the five-year average of 87 per cent and the lower end of the five-year range of 83 per cent.”

Analysts at Morgan Stanley said Gazprom had generated almost $8bn of free cash flow in the first nine months of the year and assuming a 50 per cent payout ratio could declare a record annual dividend of Rbs29.7 a share, up from Rbs12.55 last year.

Shares in Gazprom were up 2 per cent at Rbs332 on Monday.

A report released on Monday by the human rights group Global Witness showed the world’s biggest gas companies, most of which also produce oil, reported $65bn profits in the third quarter of 2021, up 24 per cent from the same period in 2019. A higher increase was recorded relative to 2020 because this was skewed by the plunge in demand in the early months of the pandemic.

“These eye-watering profits made by already extremely wealthy gas companies show that, whilst not of our making, it is citizens who are being forced to pay for the energy crisis,” said Jonathan Gant, senior gas campaigner at Global Witness.

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